The UK’s energy companies have called for a radical shake-up of the industry regulator, Ofgem, accusing it of overseeing a rise in domestic bills and slowing Britain’s economic growth.
The industry’s trade association, Energy UK, has called for the watchdog to be stripped of some of its responsibilities after overseeing “a dramatic increase in red tape” that it claims has reduced growth and pushed up costs for households.
In a report, the trade group noted that despite the government’s plan to reduce the cost of regulation by 25% by the end of this parliament, Ofgem’s headcount had been allowed to increase by 120% over the past 10 years while its budget grew by 200%. By contrast, the energy sector’s workforce had grown by only 8% over the same period.
The group’s indictment of the energy regulator for Great Britain comes amid deepening dissatisfaction with the government’s energy policies, and just days after sector bosses told MPs that the approach would lead to a steep hike in gas and electricity bills by the end of the decade.
The trade group, which represents the views of Britain’s biggest energy companies, has called on the government to strip the regulator of many of its duties and to limit its focus on economic regulation of network companies and other energy infrastructure.
Instead, it proposes handing the responsibility for protecting consumers to the Competition and Markets Authority (CMA), and the delivery of energy schemes to “other suitable organisations”.
The calls to reform Ofgem have grown since the government agreed to establish a new water regulator to replace the powers of Ofwat, the Drinking Water Inspectorate and the Environment Agency in a “reset” for a sector that has been dogged by rising costs, financial strain and pollution scandals.
A government review of Ofgem’s role by Ed Miliband, the energy secretary, began last December and recommendations for change are expected shortly.
Writing in the Telegraph, Energy UK’s chief executive, Dhara Vyas, said: “There is a growing sense, in our sector and elsewhere, that the energy regulator has lost its way. By becoming too big and bureaucratic, it has overseen a dramatic increase in red tape, reducing growth and pushing up costs for the very customers it tries to protect.”
after newsletter promotion
An Ofgem spokesperson said: “We will continue to work closely with the industry, its trade body, Energy UK, and consumer groups as the energy system evolves, and the Ofgem review is an important opportunity to ensure regulation and our remit keeps pace with change.”
“We’re keen to work with industry to cut red tape and back investment, but firm regulation remains vital to protect consumers and maintain confidence in the sector,” the spokesperson added.
