Households are set to gain extra protections from energy providers with significant proposals devised to shake up the energy regulator Ofgem. As part of Labour’s vision, the watchdog could be endowed with new consumer-centric powers, such as reducing the eight-week minimum period suppliers currently have to respond to complaints, and instituting automatic compensation for consumers when errors occur with their energy bills.
The move aims to restore faith in the energy sector, which suffered a damaging blow to trust in 2022 amid soaring energy costs that led to the downfall of several smaller suppliers.
In addition to these reforms, larger energy companies faced accusations of capitalising on Russia’s invasion of Ukraine, which sent wholesale gas prices soaring; these firms dramatically raised energy tariffs, citing the need to offset rising expenses, yet later reported record profits. Energy consumers minister Miatta Fahnbulleh commented that the Government has “learned from the energy crisis”, but acknowledged that bills remain excessively high.
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Fahnbulleh stated: “We will ensure that working people have access to the best possible support to choose more affordable, smarter, clean energy that is right for them. Energy bills are still too high and that is why we worked with suppliers to announce £500million of additional winter support.”
In a recent move, Ofgem revealed that there would be a 1.2% rise in the energy price cap this January, marking yet another escalation within a few months—following a significant 10% hike observed in October. Ofgem adjusts the price cap for households on a quarterly basis, primarily influenced by the costs prevailing in the wholesale energy markets, reports the Mirror.
Despite a dip from their peak levels of last year, energy bills are still markedly higher than the averages witnessed over the preceding decade. Officials have highlighted that Ofgem’s upcoming reforms will concentrate on refining the processes involved with bill payment and handling complaints. The review will also contemplate ways in which Ofgem might tackle broader issues, including the promotion of increased energy efficiency in homes through the adoption of heat pumps and solar panels.
Jonathan Brearley, chief executive of Ofgem, expressed his support for the announced review, noting that it comes after “a great deal” has evolved since the regulator’s objectives were initially established 25 years ago. He commented on the recent tribulations faced, remarking that it serves as “an important reminder to all that protecting consumers must remain the focus no matter what challenges we face”. He proceeded to say: “We have already made significant reforms to stabilise the market, drive investment in our infrastructure and begin to improve standards. However, we know more can be done with more powers.”