This time consumer rights charity Citizens Advice has accused the energy regulator of a ‘catalogue of errors’, which led to dozens of providers going out of business and rising bills for households.
The report from Citizens Advice highlighted how Ofgem failed to act promptly to concerns of financial instability in the energy market. There were also accusations that the energy regulator neglected to penalise suppliers who failed to follow regulations, with infringements sometimes continuing for as long as 10 years.
Speaking in regards to the report, an Ofgem spokesperson said: “Ofgem’s top priority is to protect energy consumers and we understand the challenges households and businesses are facing in light of the unprecedented increase in global gas prices.
“Ofgem’s safety net has protected more than four million customers, moving them to new suppliers, ensuring they do not need to worry about their energy supply and protecting their credit balances.
“In addition, the price cap is protecting millions more from the full impact of high gas prices this winter.”
Ofgem has already found itself in hot water for not being stringent enough in its vetting process for new suppliers. As the financial stability of such companies was not sufficiently checked, many of them were unable to deal with the skyrocketing wholesale costs.
This led in part to 26 energy providers going under in the last three months. Out of these, only 20 of them had a Consumer Continuity Plan which establishes the next course of action for customers in the event of a company going under. These contingency plans are required by Ofgem.
The cost to the taxpayer as a result of so many providers going out of business is thought to be around £2.6bn. This works out to around £94 per household for the year.
Chief Executive of Citizens Advice, Dame Clare Moriarty said that: “Energy customers are facing a multi-billion pound bill, in large part because Ofgem missed multiple opportunities to regulate the market and tackle rule breaking by suppliers.
“Recent wholesale price rises would have been hard to handle in any circumstances, but they need not have led to the collapse of a third of companies in the market.
“It’s now clear that reform is needed – and this isn’t just about avoiding another crisis.
Citizens Advice has called for a review of the origins of the energy crisis with special attention to Ofgem’s management of the industry. The hope being that an actionable list of steps can be drawn out to prevent similar situations occurring in the future.
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