29.07.13
ECCC slams Ofgem for lack of teeth
Ofgem needs to do more to ensure energy companies are transparent, the energy and climate change committee (ECCC) has urged.
MPs said it was difficult to work out how much money was being made overall by the big six. Regulator Ofgem makes the energy companies produce yearly financial statements, reviewed by accountants.
Sir Robert Smith, chair of the committee, said: “At a time when many people are struggling with the rising costs of energy, consumers need reassurance that the profits being made by the big six are not excessive. Unfortunately, the complex vertically integrated structure of these companies means that working out exactly how their profits are made requires forensic accountants.”
Committee member John Robertson MP said: “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.”
The committee also called for greater protection for low-income families struggling with fuel poverty. Sir Robert added: “Tax-funded public spending is a less regressive mechanism than levies on energy bills, which can hit some of the poorest hardest. Shifting the emphasis from levies to taxation would help protect vulnerable households.”
Rachel Fletcher, senior partner for markets at Ofgem, said: “We agree with the committee that suppliers have been poor at communicating with their customers. That is why Ofgem has taken the lead in pursuing transparency across all sections of the energy market, [making] energy companies produce yearly financial statements, which have been reviewed twice by independent accountants and found to be fit for purpose.”
Gary Smith, GMB National Secretary for energy called for Ofgem to be replaced by a different regulatory framework as the watchdog has been “a miserable failure in terms of looking after the interests of customers”.
He said: “Given their failings the answer isn't to give them more responsibility but to scrap them.”
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