Ofgem takes Criticism for How Long it Took to Respond to Price-Fixing Allegations in the Energy Market
How long should it take a regulator to respond to price-fixing allegations? Should it be addressed right away? What about in a few weeks? Well, according to Ofgem, it is something that can wait a whole month. Of course, this is the kind of thinking that has put Ofgem in the hot seat.
It was brought to the attention of Ofgem that it was possible to manipulate the price of wholesale gas. This means that consumers may actually be paying more than what they need to be. Being the energy regulator, this is something that Ofgem needs to address and right away.
The amount of time that it took Ofgem to respond to these allegations was far too long. While they messed around for a whole month, consumers continued to overpay on their gas prices. This news is coming to light during a time when the days are getting colder, and people need gas to heat their homes. Consumer groups are now saying that Ofgem needs to address problems with more haste. They should at least make it “look” like they care.
Right now, European competition authorities are busy gathering evidence to use against energy companies in this alleged price-fixing allegation. Authorities are now going to have to establish whether or not there has been a collusion formed between large gas providers without the government’s knowledge.
Although these investigations are already underway in places like the UK, consumer watchdogs are still not happy. This investigation could drag on for another month or more. If Ofgem would have jumped when they first received the allegations, this investigation could be wrapping up now. With cold weather still on the way, people need to know if they are overpaying or not.
The main problem seems to be that Ofgem simply does not have enough power. Sure they can issue fines, but usually this is not enough to control energy providers. In some cases, experts think that these energy providers are jacking up prices to, not only cover the fines, but to make a little extra money themselves. In short, the threat of Ofgem is becoming a laughing matter in the eyes of energy provides. They pretend to be scared of the energy regulator, but only to keep another bigger power from coming in. The government has to award more power to Ofgem if it is going to have a fighting chance.