Households pay £94 extra on energy bills due to regulator failure

0
13

Consumers have been forced to pay nearly £100 more for their gas and electricity as a result of Ofgem’s failure to properly regulate the energy supply market, a new report finds.

The House of Commons Public Accounts Committee report finds that the collapse of 29 energy suppliers as prices rose last year cost a total of £2.7 billion – or an average £94 for every household in the country.

The government has already budgeted £1.9bn to keep Bulb Energy afloat, with the ultimate cost to taxpayers unknown until the company is sold.

Between the fall of 2021 and the summer of 2022, wholesale gas and electricity prices rose to as much as 10 times the normal level. The price increase was unsustainable for a number of suppliers, whose costs to customers were capped by Ofgem.

But the PAC report found that there were problems in the energy supply market as early as 2018, with Ofgem failing to strike “the right balance between fostering competition in the energy supplier market and ensuring energy suppliers were financially resilient”.

ALSO READ  The TBEN says a journalist was 'punched and kicked' by police while covering protests in China

Ofgem’s “failure to effectively regulate the energy supplier market” was exposed by sharp price increases, which led to the collapse of companies that supplied power to four million households, which had to be turned over to surviving companies.

The committee found that Ofgem’s price cap provided “very limited protection for households against wholesale energy price increases”, noting that the regulator believes that prices “could deteriorate significantly by 2023”.

It said the treatment of vulnerable customers, who are already paying higher energy prices, was “unacceptable”.

PAC Chair Dame Meg Hillier said: “It is true that global factors have caused the unprecedented gas and electricity prices that have caused so many power outages in the past year, at such dire costs to households, but the fact remains that we have regulators to frame the create to support us in bad times.

“Problems in the energy supply market were apparent in 2018 – years before the unprecedented price spike that triggered the current crisis, and Ofgem was too slow to act.

ALSO READ  Bournemouth vs Everton Live: Score and Latest Carabao Cup Updates

“Households will pay dearly, with the cost of rescue operations added up” [record-high] bills.

“The PAC wants to see a plan within six months for how the government and Ofgem will put customer interests at the heart of a reformed energy market, driving the transition to net zero.”

The GMB union, which represents many workers in the energy sector, said the market model had let consumers down.

National Secretary Andy Prendergast said: “The government’s relentless attempt to use the market to regulate energy has been a massive disaster leaving millions of responsible households worse off.

“In reality, the market may be the right solution when it comes to selling canned beans, but it has been a terrible failure when applied to energy. The simple fact is that energy is an essential service and should be treated as such .

“Rather than expecting the public to have to choose between suppliers – many of whom seem to trade without the capital needed to meet their obligations – people just want a simple option that gives them the best price.

ALSO READ  Referees World Cup 2022: who will lead the matches in Qatar?

“Unfortunately, Ofgem turns out to be a regulator that doesn’t regulate. As a result, households are billed for their costly bankruptcy.”

An Ofgem spokesperson said many of the issues raised by the PAC were addressed in TBEN report it commissioned and published earlier this year and whose recommendations it is now implementing.

“The sheer magnitude and pace of this once-in-a-generation global energy price shock meant that supplier outages were seen around the world,” the spokesperson said. “However, the last resort supplier system acted as an essential safety net for UK consumers, ensuring they continued to receive energy when their supplier failed and keep their credits. This safety net inevitably came at a cost.

“Looking ahead to this winter, prices remain volatile, but the market is now in a much more resilient position, in part thanks to robust steps we have taken to reduce the risk of future supplier failures and to raise the bar for new suppliers to enter. . .”