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 Nridigital.com

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Commons Confidential: Smith, selfies and pushy sons

All the best gossip from party conference, including why Dennis Skinner is now the MP for Selfie Central.

Owen Smith discovered the hard way at the Labour party conference in Liverpool that one moment you’re a contender and the next you’re a nobody. The party booked a luxurious suite at the plush Pullman Hotel for Candidate Smith before the leadership result. He was required to return the key card the day after Jeremy Corbyn’s second coming. On the upside, Smith no longer had to watch his defeat replayed endlessly on the apartment’s giant  flat-screen TV.

The Labour back-room boffin Patrick Heneghan, the party’s executive director of elections, had good cause to be startled when a TV crew pounced on him to demand an interview. The human submarine rarely surfaces in public and anonymity is his calling card. It turns out that the bespectacled Heneghan was mistaken for Owen Smith – a risky likeness when vengeful Corbynistas are on rampage. There’s no evidence of Smith being mistaken for Heneghan, though. Yet.

Members of Labour’s governing National Executive Committee are discovering new passions to pass the time during interminable meetings, as the Mods and the Corbs battle over each line of every decision. The shadow cabinet attack dog Jon “Sparkle” Ashworth, son of a casino croupier and a bunny girl, whiles away the hours by reading the poetry of Walt Whitman and W B Yeats on his iPad. Sparkle has learned that, to echo Whitman, to be with those he likes is enough.

I discovered Theresa May’s bit of rough – the grizzled Tory chairman, Patrick McLoughlin, a former Derbyshire coal miner – does his gardening in steel-toecapped wellies stamped “NCB” from his time down the pit thirty years ago. He’ll need his industrial footwear in Birmingham to kick around Tories revolting over grammar schools and Brexit.

Another ex-miner, Dennis Skinner, was the MP for Selfie Central in Liverpool, where a snap with the Beast of Bolsover was a popular memento. Alas, no cameras captured him in the Commons library demonstrating the contorted technique of speed-walkers. His father once inquired, “Why tha’ waddling tha’ bloody arse?” in Skinner’s younger days, when he’d top 7mph. Observers didn’t dare.

The Northern Poorhouse minister Andrew Percy moans that he’s been allocated a broom cupboard masquerading as an office in the old part of parliament. My snout claims that Precious Percy grumbled: “It’s so small, my human rights are violated.” Funny how the only “rights” many Tories shout about are their own.

The son of a very prominent Labour figure was caught trying to smuggle friends without passes into the secure conference zone in Liverpool. “Don’t you know who I am?” The cop didn’t, but he does now.

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories