Why Ofgem's investigation into energy prices won't solve anything

Energy regulator Ofgem has announced a 'once and for all' competition investigation into the sector. It's avoiding the real problem.

by Emma Haslett
Last Updated: 07 Jul 2015

Predictable times at Ofgem: the energy regulator has just announced the Competition and Markets Authority is about to begin an 18-month investigation into energy prices

The investigation will apparently last 18 months and will look at the profits of the Big Six suppliers: British Gas, SSE, Npower, EDF, Scottish Power and E.On, which between them control 95% of the market.

The regulator has already done an 'initial report' into the matter, and concluded that companies are keener to raise prices when energy prices rise than they are to lower them when they fall (no kidding), 'may be making excess profits' (like making a profit is a bad thing) and charge more to customers who've never switched.

Alright, so some of those practices are pretty dastardly. But spending millions on a competition inquiry ignores the real problem: half the reason energy companies have to charge high prices is because the UK's energy infrastructure is in such a sorry state that Ofgem has warned blackouts are imminent. So imminent, in fact, that the National Grid has just started recruiting companies it will pay to turn their lights off.

The UK's power stations stations are now close to 95% of capacity - which means that unless energy companies start ploughing their 'excess profits' into building new power stations soon, we'll be plunged into medieval-style darkness. So whatever the CMA discovers, energy prices are going to stay high for the forseeable future. Don't blame the companies: blame the people who didn't plan ahead, ie. the government.

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