Energy News

Consumers call on Ofgem to crack down on energy companies

Thursday 9 June, 2011

By Martin Fagan - news@consumerchoices.co.uk

Consumers think Ofgem's proposals to improve the energy market don’t go far enough, says new research.

Consumers approve of energy regulator Ofgem’s plans to help them get more from the competitive energy market, but say more needs to be done.

Despite 98% of people welcoming clear and transparent information from suppliers such as standardised information on energy bills and annual statements, 48% of consumers say Ofgem’s proposals don't go far enough.

uSwitch.com, which carried out the study, said the results show the depth of the problems consumers encounter in the energy market and the frustration this causes.

Typical hurdles identified include confusion caused by the array of tariffs offered by suppliers (87%) and lack of understanding over how energy prices are calculated (69%).

Despite the current lack of transparency, uSwitch said the biggest driver for switching suppliers was price, as 27% who switched did so because their supplier increased its prices. A further 9% did so because they received a high energy bill, while 10% of consumers switched because their fixed price plan came to an end.

“There is still a question mark over whether Ofgem's proposals will drive the nail in hard enough to satisfy consumers,” said Ann Robinson, director of consumer policy at uSwitch.

“Almost half think Ofgem's proposals don't go far enough, so it's important the regulator comes out with some decisive actions to prove to them that it does have the appetite to turn the energy market around. This way, consumers really will see that it means business.”

Following the news that Scottish Power would raise its gas prices by 19% and its electricity prices by 10%, former environment minister and the current Chair of the Energy and Climate Change Committee, Tim Yeo MP, said that Ofgem needed more powers in order to force change on the energy industry.

Speaking on BBC Radio 4’s Today programme, Mr. Yeo said there was a very strong public suspicion energy prices tend to go up faster than they come down and that energy companies had a ”case to answer”. He added that the government could give Ofgem the power to force energy companies to open their books to thorough financial scrutiny.

“What we need is transparency from the companies to show that the prices they have had to pay on the wholesale market in the past three or four months justify enormous price increase, and the companies so far have not provided that,” Mr. Yeo said.