Ofgem demands U.K. utilities cut energy bills


Alistair Buchanan,
Chief Executive,
London, U.K. — (METERING.COM) — December 18, 2008 – U.K. energy regulator Ofgem has said it is not satisfied with the pace of delivery of savings to prepayment and other customers who it believes are being charged unfair premiums by suppliers and it has threatened action against such unfair pricing.

In a statement Ofgem said that while the six main energy suppliers have pushed ahead towards stripping more than half a billion pounds in unfair pricing from energy bills, it is concerned about the rate of progress and has moved to ban such pricing.

In a recent probe into the energy supply market Ofgem found that prepayment meter customers, customers in former monopoly areas, and those taking only electricity under a single fuel arrangement were paying higher prices than other customers, and that it would seek agreement with the suppliers on proposed reforms.

Since the probe began more than £300 million has been taken off the premiums paid by customers including prepayment meter users. The companies have indicated that further reductions should reach at least £200 million for more than four million households who are off the gas grid and others who the probe identified as missing out on the best deals.

“We’ve seen progress but it’s certainly not the endgame,” said Ofgem chief executive Alistair Buchanan. “We’ve seen encouraging signs since the end of our initial investigation but we demand more and quicker action for those customers currently losing out.”

In the statement Ofgem also confirmed that in January it will launch a six-week consultation on proposals to change suppliers’ licences to ban unfair prices and to ensure that consumer interests are more fully protected. Three possible options for licence changes will be consulted: cost-reflective pricing between payment methods with the differences reflecting the underlying cost to the supplier, prohibition on undue price discrimination with differentials objectively justifiable on cost or other grounds, and relative price controls.

If sufficient progress is not made following consultation, further action will be considered by the regulator, with a full market investigation reference to the Competition Commission not ruled out.