‘You’re just toothless!’ MPs mock Ofgem chief as energy profits rocket
MPs venting their frustration about rising energy profits have been told to take responsibility for price rises themselves.
Ofgem's interim chief executive Andrew Wright turned the tables on his inquisitors in Portcullis House after Labour backbencher Ian Lavery called his watchdog a "toothless tiger" during this morning's evidence session.
The clash followed yesterday's announcement from the 'big six' that their profits per household have risen by more than five times since 2009.
The watchdog has been widely criticised for not doing more to stop the energy companies ramping up their prices, but Wright mounted a stern defence by arguing politicians should take more responsibility.
"If you think we should go further and should be looking at regulating these companies directly, that's certainly a legitimate debate for politicians to have," he added.
"We will do what we can within the public policy framework that is set out for us. We are not elected politicians… we take actions to make the market more competitive, which is our mandate.
"We do what we can to benefit consumers within the public policy framework that's been set for us. That's our job and we don't step outside of that because we don't have the statutory remit to do so."
Lavery said it was "absolutely ridiculous" that dual fuel bill profits are set to increase from £53 in 2012 to £105 this year.
"We should be focusing on those people who cannot afford to heat their homes," he said.
Wright responded by refusing to condemn any specific level of profit as "right or acceptable", in a carefully articulated defence of the regulator's role.
"We think companies need to earn the profits they make by providing good, efficient service, reducing costs, improving performance and winning customers," he said.
"The way we challenge companies is by making changes to the market to make it more competitive. The changes we've made will make a big difference to consumers."
Wright claimed it was easier than ever before for energy customers to switch suppliers.
But he accepted the present state of play was unacceptable, prompting Liberal Democrat MP Sir Robert Smith to suggest further action is required.
The energy and climate change committee had criticised Ofgem for not implementing more recommendations from accountancy firm BDO which would have forced energy firms to provide transparent reporting on their profits.
"There may not be a rational reason for the breakdown of trust, but the breakdown has happened and you therefore need to go that further mile to restore trust," Smith said.
Wright replied: "We are going the extra mile in revisiting this question and asking ourselves whether there is something of value that could be done."
He promised an ongoing consultation on the issue would complete in early December, prior to a potential switch from Ofgem early in the new year.
Energy firms' chief defence for increased profits has been the need to invest more in Britain's infrastructure, as the energy mix slowly transitions from carbon-rich resources to renewables.
The decision of RWE npower to pull out of its £4 billion Atlantic Array project – a huge wind farm proposal off the north Devon coast – is being viewed as a hammer-blow to the coalition government's renewables hopes.
Setbacks to the development of offshore wind will only serve to fuel anger among the Conservative backbenchers concerned by prime minister David Cameron's review of subsidies for green energy, currently under review in Whitehall ahead of next month's autumn statement.
Around 25 Tory MPs are thought to have confronted Cameron on the issue by warning of a potential split in the party.