Reacting to Ofgem’s announcement, Tim Yeo MP, the Chair of the Energy and Climate Change Committee commented:
"Ofgem’s announcement underlines the fact that the energy market has been failing consumers. With fresh evidence about tacit coordination over the timing and size of price announcements, it is no surprise to the six largest suppliers that they have completely lost the public’s trust.
A full market investigation should help to ensure that consumers eventually get a fair deal. However I am extremely concerned about the effect on investor confidence. A prolonged period of uncertainty while the investigation is carried out, could delay construction of new gas-fired generation capacity which is essential to avert the coming capacity crunch and keep Britain’s lights on.
Ofgem could have avoided this situation entirely if it had woken up earlier and implemented tough measures recommended by accountants BDO to increase the transparency of the energy industry. The Energy and Climate Change Committee has consistently called for greater transparency to reassure consumers that energy price rises are justified and not simply introduced because of a lack of competition in the market."
The Energy and Climate Change Select Committee has repeatedly called for greater competition in the UK energy market:
- The Committee’s report on Consumer Engagement in the Energy Market (December 2012) warned that low levels of competition in the market was responsible for low levels of switching and a lack of engagement from consumers.
- The Energy Prices, Profits and Poverty (July 2013) report criticised Ofgem for not implementing recommendations made by accountancy firm BDO that were intended to ensure transparent reporting of profits and costs across the generation and retail arms of the six large vertically integrated energy companies.
Image: Parliamentary copyright