Is Ofgem “failing consumers”?

Five questions answered on MPs criticism of Ofgem.

A group of MPs have come forward and said energy regulator Ofgem is “failing consumers”. We answer five questions on the MPs’ problem with Ofgem.

What exactly has Ofgem been criticised for and by whom?

 The Energy and Climate Change Committee (ECCC) has written a report saying that the watchdog was "failing consumers by not taking all possible steps to improve openness".

They added that greater transparency over the profits made by the big six energy (E.On, SSE, British Gas, Npower, EDF and Scottish Power) companies is needed.

"Greater transparency is urgently needed to reassure consumers that high energy prices are not fuelling excessive profits," the committee said.
Adding that Ofgem had not fully implemented the recommendations of the accountants it commissioned to improve how energy companies report their profits.

What have Ofgem said?

Ofgem has responded by saying it made companies produce yearly financial statements, which they had then been reviewed by accountants.

"Ofgem has made energy companies produce yearly financial statements, which have been reviewed twice by independent accountants and found to be fit for purpose," Ofgem's senior partner for markets, Rachel Fletcher, told the BBC.

However, Ofgem did admit that energy companies have been poor when it comes to communicating with customers.

So, what’s the problem with this?

The committee say forensic accountants are needed to properly understand these accounts and work out the correct profit, because the companies have different divisions to deal with different functions of their business and these often buy and sell services and energy from each other. This makes it difficult to determine how much profit is actually being made.

"Ofgem needs to use its teeth a bit more and force the energy companies to do everything they can to prove that they are squeaky clean when it comes to making and reporting their profits," said committee member John Robertson.

What have the independent experts said?

"We want the government to introduce simple energy pricing and a clear ring-fence between generation and supply businesses, so consumers can see exactly what they're paying for and be more confident that there is effective competition in the energy market," Which? executive director Richard Lloyd told the BBC.  

Angela Knight, the chief executive of Energy UK, a body which represents energy companies, said she thinks companies have come a long way on transparency.

"Energy companies all publish annual accounts and, in addition, both the generation and supply parts of the business provide Ofgem with all the information about revenues, costs and profits for which the regulator asks," she told the BBC.

What else did the committee say?

They also reprimanded the government for not helping poorer families with their energy bills more. Adding that using levies on fuel bills to raise funds for social and environmental programmes may end up hitting those on low incomes.

Ofgem has been criticised. Photograph: Getty Images

Heidi Vella is a features writer for

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Zac Goldsmith has bitten off more than he can chew

In standing as an independent, Goldsmith may face the worst of both worlds. 

After just 48 years, we can announce the very late arrival of the third runway at Heathrow. Assuming, that is, that it makes its way past the legal challenge from five local councils and Greenpeace, the consultation with local residents, and the financial worries of the big airlines. And that's not counting the political struggles...

While the Times leads with the logistical headaches - "Heathrow runway may be built over motorway" is their splash, the political hurdles dominate most of this morning’s papers

"Tory rebels let fly on Heathrow" says the i's frontpage, while the FT goes for "Prominent Tories lead challenge to May on Heathrow expansion". Although Justine Greening, a May loyalist to her fingertips, has limited herself to a critical blogpost, Boris Johnson has said the project is "undeliverable" and will lead to London becoming "a city of planes". 

But May’s real headache is Zac Goldsmith, who has quit, triggering a by-election in his seat of Richmond Park, in which he will stand as an anti-Heathrow candidate.  "Heathrow forces May into Brexit by-election" is the Telegraph's splash. 

CCHQ has decided to duck out of the contest entirely, leaving Goldsmith running as the Conservative candidate in all but name, against the Liberal Democrat Sarah Olney. 

What are Goldsmith's chances? To win the seat, the Liberal Democrats would need a 19.3 per cent swing from the Conservatives - and in Witney, they got exactly that.

They will also find it easier to squeeze the third-placed Labour vote than they did in Witney, where they started the race in fourth place. They will find that task all the easier if the calls for Labour to stand aside are heeded by the party leadership. In any case, that Clive Lewis, Lisa Nandy and Jonathan Reynolds have all declared that they should will be a boost for Olney even if she does face a Labour candidate.  

The Liberal Democrats are fond of leaflets warning that their rivals “cannot win here” and thanks to Witney they have one ready made.  

Goldsmith risks having the worst of all worlds. I'm waiting to hear whether or not the Conservatives will make their resources freely available to Goldsmith, but it is hard to see how, without taking an axe to data protection laws, he can make use of Conservative VoterID or information gathered in his doomed mayoral campaign. 

But in any case, the Liberal Democrats will still be able to paint him as the Brexit candidate and the preferred choice of the pro-Heathrow Prime Minister, as he is. I think Goldsmith will find he has bitten more than he can chew this time.

This article originally appeared in today's Morning Call, your essential email covering everything you need to know about British politics and today's news. You can subscribe for free here.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.