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CMA Energy Investigation – Ofgem Respond

In the latest in our series analysing the responses of key players to the CMA investigation into the UK energy market we focus on Ofgem, the much maligned energy regulator who are seen by many to have lost their way culminating in the CMA probe.

Without too much reading between the lines the tone of Ofgem’s letter gives an impression of tetchiness with Ofgem addressing the CMA as a rival rather than a supporting aide in improving the energy market.

Ofgem open their letter saying:

“Based on your Issues Statement published on 24 July 2014, our views are broadly aligned. The theories of harm set out in your Issues Statement have a stronger focus on the wholesale electricity market compared to the issues described in Ofgem and OFT’s State of the Market Assessment and Ofgem’s Initial Submission. However the CMA’s approach of looking at all relevant factors will ensure that any market features harming competition are thoroughly investigated.”

The impression given is of Ofgem being unhappy that their defined lead is not being followed to the letter by the CMA with a less than veiled implied criticism of the their subtly different direction.

Indeed rather than elaborating on their views how the CMA’s chosen ‘Theories of Harm’ can be addressed, Ofgem have instead responded:

“Given the focus on wholesale electricity markets implied by these theories of harm, the purpose of this letter is to highlight major policy and monitoring activities undertaken by Ofgem in relation to wholesale electricity markets which will be relevant to the CMA’s independent investigation”.

So there we have it, an opportunity to align and support the CMA in its investigation has become an exercise in Ofgem covering its back like no other.

Beyond that rather desperate self justification Ofgem proffer very little, agreeing that it is right for the CMA to ignore the gas wholesale market and breathlessly claiming that they would be keen to “meet with the CMA panel and staff to explain developments and Ofgem’s ongoing work in the energy markets in more detail”.

Note the absence of any mention of improving the nature of the energy market for consumers.

Ofgem’s self-justification yet again fails the market it is there to serve.

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