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

Photo: Getty Images
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The Fire Brigades Union reaffiliates to Labour - what does it mean?

Any union rejoining Labour will be welcomed by most in the party - but the impact on the party's internal politics will be smaller than you think.

The Fire Brigades Union (FBU) has voted to reaffiliate to the Labour party, in what is seen as a boost to Jeremy Corbyn. What does it mean for Labour’s internal politics?

Firstly, technically, the FBU has never affliated before as they are notionally part of the civil service - however, following the firefighters' strike in 2004, they decisively broke with Labour.

The main impact will be felt on the floor of Labour party conference. Although the FBU’s membership – at around 38,000 – is too small to have a material effect on the outcome of votes themselves, it will change the tenor of the motions put before party conference.

The FBU’s leadership is not only to the left of most unions in the Trades Union Congress (TUC), it is more inclined to bring motions relating to foreign affairs than other unions with similar politics (it is more internationalist in focus than, say, the PCS, another union that may affiliate due to Corbyn’s leadership). Motions on Israel/Palestine, the nuclear deterrent, and other issues, will find more support from FBU delegates than it has from other affiliated trade unions.

In terms of the balance of power between the affiliated unions themselves, the FBU’s re-entry into Labour politics is unlikely to be much of a gamechanger. Trade union positions, elected by trade union delegates at conference, are unlikely to be moved leftwards by the reaffiliation of the FBU. Unite, the GMB, Unison and Usdaw are all large enough to all-but-guarantee themselves a seat around the NEC. Community, a small centrist union, has already lost its place on the NEC in favour of the bakers’ union, which is more aligned to Tom Watson than Jeremy Corbyn.

Matt Wrack, the FBU’s General Secretary, will be a genuine ally to Corbyn and John McDonnell. Len McCluskey and Dave Prentis were both bounced into endorsing Corbyn by their executives and did so less than wholeheartedly. Tim Roache, the newly-elected General Secretary of the GMB, has publicly supported Corbyn but is seen as a more moderate voice at the TUC. Only Dave Ward of the Communication Workers’ Union, who lent staff and resources to both Corbyn’s campaign team and to the parliamentary staff of Corbyn and McDonnell, is truly on side.

The impact of reaffiliation may be felt more keenly in local parties. The FBU’s membership looks small in real terms compared Unite and Unison have memberships of over a million, while the GMB and Usdaw are around the half-a-million mark, but is much more impressive when you consider that there are just 48,000 firefighters in Britain. This may make them more likely to participate in internal elections than other affiliated trade unionists, just 60,000 of whom voted in the Labour leadership election in 2015. However, it is worth noting that it is statistically unlikely most firefighters are Corbynites - those that are will mostly have already joined themselves. The affiliation, while a morale boost for many in the Labour party, is unlikely to prove as significant to the direction of the party as the outcome of Unison’s general secretary election or the struggle for power at the top of Unite in 2018. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.