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Ofgem – the folly continues

ofgem logo2014 hasn’t been an auspicious year for Ofgem, the energy regulator:

  • Bruised and battered from pillar to post.
  • Maligned by many, praised by few.
  • Neutered by their own decision making.
  • Criticised by their predecessors.

…but like any organisation under pressure the “we’ll change” narrative is well and truly under way.

Labour, in their bid for electoral success in 2015 have made no bones about the fact that Ofgem, on their watch, will be disbanded and replaced by an as yet unidentified “fit for purpose” regulator.

DECC, Ofgem’s bosses, are conspicuous in their absence when it comes to defending their charges.

Whilst the CMA has to all intents and purposes replaced Ofgem as the key arbiter in the energy market leaving Ofgem high and dry and not very mighty.

In response, Ofgem Chief Executive, Dermot Nolan, coming to the end of his first year in charge has made bold claims about the future intent of his charges.

Nolan, told the grandly titled Utility Week Congress, that:

“I want to see a smaller license in the future, with the underlying principle of treating customers fairly. That’s the ground we want to go to over the next couple of years.

“There would be a general duty to treat customers fairly – the regulator would not be overly specific. You are placing the burdens on suppliers themselves to think about [what that means].

“I would like to see the direction of travel where if we feel the reliance on Standards of Conduct is sufficient, we would remove that detail.”

That sounds very much like self-regulation in a market that has proven itself utterly incapable of doing just that.

How this latest, desperate attempt to sound relevant chimes with Ofgem’s on-going policies for the market are as ever utterly unclear.

Nolan will point to support from an equally embattled regulator Ofwat, whose Chief Executive Cathryn Ross, said:

“I very much agree with principles based regulation. The way to square that circle is through precedent –being very clear on how and why you are acting on the principles set out, and having that conversation with the sector.”

Ofgem and Ofwat, a definite vote winner Mr Miliband. Make hay Ed.