Ofgem admits it should have acted sooner to protect UK households
The energy industry regulator has admitted that British households would have been better off weathering the winter gas crisis if it had acted sooner to crack down on financially unstable energy suppliers.
The Ofgem chief executive, Jonathan Brearley, told MPs that households could face a bill of about £200m to cover the costs left by a string of energy provider collapses since gas market prices rocketed to record highs last September.
“We need a retail sector that’s more resilient and more able to deal with the kind of shock that we’ve seen,” Brearley told the Commons business select committee. “And to be clear, chair, we accept that had we done that earlier this would have been better for customers.”
The Ofgem boss, who stepped into the role in February 2020, identified multiple missed opportunities to strengthen the rules for energy suppliers that could have helped to avoid the number of supplier collapses, and the related costs for bill payers and the Treasury.
Instead, regulatory decisions had been “dominated” by the desire to create more competition by increasing the diversity of suppliers within the market but that new regulation to protect customers against poorly-run companies was not put forward “with the pace and scale that I think with hindsight that we needed”.
“When you look back at the history of Ofgem’s decision-making … without doubt there was a perspective at the time that we needed to diversify the market, and challenge the dominance of the big incumbent companies. That’s what dominated thinking at the time. It’s my view that we should have combined that with greater financial resilience,” he said.
The UK has had the largest number of energy company casualties across Europe, after a steady influx of energy
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