Ofgem Chief Executive Apologises To Customers For Not Capping Energy Prices

Dermot Nolan, chief executive of the UK’s energy regulatory body Ofgem, has come under fire recently over the failure to take customers off expensive energy tariffs. As the head of Ofgem, he will not receive a bonus this year as it was revealed that he had not taken enough action to impose price caps for customers – resulting in thousand of households paying over the odds for their energy. He has also apologized to customers, especially those who are considered vulnerable, for not capping bills sooner. The UK government is planning to introduce a new Draft Domestic Gas and Electricity (Tariffs Cap) Bill, which it hopes will save low income households over £1 million a year.

Rachel Reeves, the chair of the business, energy and industrial strategy select committee, urged that Ofgem staff should not receive bonuses this year. She said that it’s impossible to justify spending hundreds of thousands of pounds in bonuses when so many vulnerable customers have paid extortionate amounts for their energy throughout the year. Nolan responded that a large percentage of their staff were not involved in supplying energy to households, and he has already agreed not to receive a bonus himself.

“It’s not about what you hoped for” said Rachel Reeves. “You’re the regulator for the energy companies. My children hope for lots of things from Father Christmas; they can hope, they don’t have much impact on what Father Christmas delivers in their stockings. But yours isn’t about hope; you are the regulator, you are the person who is delivering or supposed to be delivering on this. The whole language you use is like a bystander, rather than an active participant in the market.”

Peter Kyle, the Labour MP for Hove, added that “Your testimony sounds so incredibly passive. Do you ever roll your sleeves up and really get stuck in? I don’t see any evidence of that.” In response to this, Nolan said “I apologise if I seem passive, I honestly do not feel passive … I wish we had moved earlier in putting price caps in.”

Nolan has made it clear that he’s committed to introducing a price for customers, although he has admitted that he doesn’t particularly agree with the idea. “I remain of the view that effective competition in the long run is better than a regulated market,” he said. Record numbers of customers switched energy suppliers in 2017, with an estimated 5.5 million choosing to leave their supplier for cheaper tariffs elsewhere. That’s a 15% increase on last year, which lobby groups say highlights the need for reforms across the energy market.

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