SIMON WATKINS: Ofgem is lacking in energy - bill-payers deserve a better regulator
On the march: Public anger over rising energy bills has been a running battle for almost two years now
The public anger over rising energy bills has been a running battle for almost two years now, not least because there has been no agreement between the energy companies and outside observers about how much profit they are really making from bill-payers.
Are they cutting bills appropriately when raw energy prices fall?
Are they too keen to pass on price rises?
That is surely when the industry regulator should come into their own.
Ofgem should be able to provide chapter and verse on this issue.
It should be able to give definitive answers to the public and use its knowledge to bring pressure to bear on energy companies if appropriate.
But it now appears that Ofgem is less than confident in its own numbers and has withdrawn its key measure of energy company profits to review how they make their calculations.
The energy industry is cock-a-hoop. They will argue it shows they have been right all along and that charges of profiteering have been unfair.
I doubt that bill-payers will feel much better however.
The issue at stake is not a simple calculation. Energy groups have many costs that are not connected to the cost of gas or oil or coal. They buy their raw fuel months in advance. They try to smooth out those costs by hedging in financial and commodity markets.
But if our regulator cannot get a grip on these issues, it is small wonder that the public do not feel their interests are necessarily in safe hands.
The row over energy prices has also led to some rash political promises, notably Ed Miliband’s promise of an energy price freeze, which ended up handing the energy companies an excuse for not cutting prices.
With the companies under attack and the public feeling the pinch on their bills, it may well be that both sides deserve rather better from Ofgem.
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Another week and another set of huge fines on banks. More groans of remorse and pledges of cultural change from bank bosses.
The fury on the part of the public with the endless stream of scandal is probably at least matched by that of the many thousands of ordinary bank staff who have nothing to do with the wrongdoing.
In our interview this week, Metro Bank chief Craig Donaldson recounts the huge financial and emotional suffering of innocent bank workers at Royal Bank of Scotland at the time of the financial crisis.
The fact that greed-inspired incompetence and crookedness does not just wreck banks but wrecks people’s livelihoods should not be forgotten. We can only trust that criminal investigations lead to painful results for the guilty.
In the meantime, smile at your bank teller – it’s not their fault.
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