MPs today called for the energy industry to receive further scrutiny and forcible transparency over the cost of energy generation and the prices being passed on to consumers.
Ofgem has been at the centre of the outcry.
It is felt that the regulator is not doing enough to encourage “greater transparency and competition” within the energy market and was criticised for adopting a “relatively light touch approach”.
The main concern is that prices are not in line with the underlying cost of energy and that consumers are being overcharged to boost profits.
Chief Executive of Energy UK Angela Knight however says “profit is a good thing” justified due to the amount of investment required in the UK to keep bills low in the future.
But, is it too little too late to restore consumer trust in the energy suppliers?
MPs said the complex way the energy companies operate as vertically integrated players in a market requires a ‘forensic accountant’ to unravel the true picture of the profits being generated and the extent of the investment.
Chair of the Energy and Climate Change Select Committee, Sir Robert Smith said
“consumers need reassurance that the profits being made by the big six are not excessive.”
And it is not only the cost that is passed onto the consumer, but the confusion too, with many customers not understanding the array of plans and tariffs, bills and statements out there, further alienating the consumer from the industry.
However, whilst the government is focusing on the domestic market and highlighting the issues of bill payment and fuel poverty, the issues are just as prominent in the business energy space.
90% of business energy consumers say that energy prices will have a significant impact on their business if prices continue to rise 15% each year.
Fuel poverty can also be seen as a business issue, with comparable businesses forced to pay over the odds for similar amounts of energy due to suppliers charging out of contract rates up to 300% more than some contract rates and by stinging business consumers by rolling them over onto higher priced contracts.
Despite Ofgem being accused of not doing enough, they are on the verge of rolling out the policy changes from the Retail Market Review, which will bring benefits to both business and domestic consumers.
Whilst MPs are accusing both the government and Ofgem for not working hard enough, they should be encouraging collaboration to work with the energy suppliers to create a balanced industry that works for consumers both now and in the future.
Ofgem might not have it 100% right, but they are the only body openly trying to make changes – perhaps with further support from other industry bodies, the impact on issues affecting consumers could go deeper, rather than just the tip of the iceberg.