“ Energy firms are very quick on the draw in raising prices or penalising customers on pre-payment meters but Ofgem seems agonizingly slow in taking effective action to protect consumers”.

“Ofgem is relying on consumers’ ability to switch suppliers in order to generate competition and to force prices down, but if people are inadvertently switching to more expensive deals then something is going wrong and Ofgem’s approach is not working”.“There are 5.4 million people in fuel poverty and winter is almost here.  Ofgem needs to do much better, especially in protecting vulnerable consumers, or it should hand in its badge”.

Mr Bacon was speaking as the Commons public accounts committee published its report on the removal of price controls from the energy, telecommunications and postal service sectors.  The report finds that regulators rely on consumers’ ability to switch suppliers in order to put pressure on suppliers to provide lower prices and better service, but a survey of electricity consumers who had switched found that about a quarter had inadvertently moved to a more expensive supplier. 

Ofgem believes that prepayment meter customers are paying more for their energy than is justified by the additional costs of the meter.  The report also finds mis-selling by energy companies continues to occur, despite a recommendation by the Commons public accounts committee in 2000 that Ofgem should take action.

According to price comparison website uSwitch.com, 5.4 million homes are now spending 10 per cent or more of their disposable income on energy, which is the definition of fuel poverty.  Research by uSwitch.com also found that almost a third of pensioner households are now in fuel poverty, as are 20 per cent of families with one income and 17 per cent of single person working households.

13 November 2008

See also:
PAC REPORT: Protecting consumers? Removing price controls

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