21st August 2014
Labour has pledged to give a new regulator the powers to tear-up energy companies’ licenses if they are found to be not acting in the best interests of consumers.
Caroline Flint MP, Labour’s Shadow Energy and Climate Change Secretary, has claimed that such laws would apply where “firms fail to meet standards there must be tough and decisive action”.
The current energy regulator, Ofgem said it already has such powers in place.
The energy sector is already under the current watchdog’s microscope where in June Ofgem launched its biggest ever industry investigation by referring the UK’s power sector to the competition watchdog.
The Competition and Markets Authority (CMA) is expected to publish its conclusions by the end of next year.
A recent assessment of the energy market, by Ofgem in conjunction with the Office of Fair Trading and the CMA, showed that competition was not working as well as it should for consumers.
Ann Robinson, director of consumer policy at comparison site uSwitch said that given energy bills have risen 168% since 2004 there has been a loss of confidence in energy companies. She added: “In a market where around 90% of people haven’t switched energy provider in the last year, it’s even more important that consumers have the strongest possible protection in place.
“The Competition and Markets Authority investigation is welcomed but hard-pressed consumers need help in the here and now. Consumers can take steps to lower bills now by using energy more efficiently and making sure they switch to the cheapest tariff.”
Clare Francis, of MoneySuperMarket, said she welcomed Labour’s proposals to give a new regulator greater powers. She added: “The energy market is broken: competition isn’t working as it should and consumers are failing to take advantage of the fact that they can probably save money by switching to a cheaper tariff. The average household could typically save £180 a year*. But apathy reigns and we need to be doing more to tackle this.
“In the meantime, bill payers shouldn’t be blindsided by talk of no price rises this year or a price freeze if Labour wins the election. With winter around the corner, now is the time to take action and bring the cost of your bills down.”
According to MoneySuperMarket, the best value deal currently on the market is Extra Energy’s ValuePlus Fix September 2015 at £990 a year – £194 a year cheaper than someone paying the average standard prices.