OFGEM Finally Puts It's Foot Down and Goes To War With The Energy Firms

OFGEM, the UK energy regulator is launching another front in its long war with the energy companies by demanding clearer cut pricing of their tariffs. The energy companies are regularly competing with the bankers for the public enemy one in Britain; with good reason as British homeowners pay the most for heating and electricity in Europe.



Some of the most condemning language that has been seen by a UK regulator in recent years, came from power watchdog OFGEM this week. The body has accused the big six energy giants of 'bamboozling' buyers of gas and electricity. They are accused of flooding the market with over 300 different tariffs and rates, causing confusion which results in customers having little or no market power, owing to the fact that they were unable to pick the top deal.



It has now been confirmed that within the coming months, the top energy suppliers will be hit with a reform. The energy companies must now comply with the new rules. The OFGEM have also made it clear to the companies that they will do whatever it takes to ensure that UK consumers get a fair deal, and that the industry is brought back in line.



The ever present anger at energy prices among the British public are one reason for the unprecedented criticism from OFGEM. Another would be the conclusion of an investigation into energy pricing from 2008; in that time the energy companies have done next to nothing to respond to what has come out of that investigation. Now with patience of both public and regulator exhausted, OFGEM has decided to finally use the broad range of its regulating powers.



The government did try to intervene in the 90s, with the idea that if they increased competition then prices for gas and electricity would fall. It would seem, however, that this has had an opposite effect as prices are now spiralling out of control.



The government had high hopes that new energy suppliers would come into play, however there are still only six main suppliers with few other providers able to compete.



One of OFGEM's main drives is for a single tariff, as a flat rate for gas and electricity should be one of the main ways to make prices better understood and more comparable between the energy suppliers for the public. With a reduction and much simpler range of offers on top of the flat rate tariff if customers choose one of these offers.



It is believed that this new system will put the consumer back in control, and may force prices down as it will become very clear who are charging the higher rates.



One indirect and unintended side effect could be in the online price comparison market, an industry which has benefitted and grown off the confusion of the dizzying array of price tariffs available. How sites such as Moneysupermarket.com go from here will be interesting to observe.



As should always be the case, the consumer should be the only winner with these reforms and shakes ups, and it's long past time. It's been three years since the original damning report and only now is action being taken, so a softly, softly approach is never going to work with the energy companies, an eye will have to be kept on them to make sure they do not go around OFGEM's back to the EU in Brussels, or they might have finally pushed their luck too far.





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Timothy Frodsham writes for Just Commercial Mortgages the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.