Ofgem: Energy market not transparent enough to measure if customers are being overcharged
The energy regulator responds to Labour’s accusations of energy companies overcharging by £4bn by stating the claims are currently unverifiable
During an interview with the Today programme on BBC Radio 4, Ian Marlee, senior partner at Ofgem told listeners that Ofgem’s research had found there wasn’t enough information available to support Labour’s claim.
The Labour party recently stated that the big six energy suppliers had been selling themselves energy, generated by their own power plants, at inflated prices to increase profits.
Labour claims energy companies overcharged Brits by £4bn
Shadow Energy Secretary Caroline Flint recently made headlines when she said Labour had conducted fresh analysis of the energy market and found that the big six were overcharging by roughly £4bn.
The study was carried out by comparing the price paid for electricity by the big six with the overall market price for a year ahead. The later set of information was provided by independent supplier First Utility.
Energy UK, the trade body which represents the energy sector, has since claimed these figures are not like for like, as the weighted average paid by the big six includes costs such as charges associated with balancing supply and demand.
Unclear if study took all factors into account
A spokesperson for Ofgem said the figures used by Labour may not take into account every element necessary to allow for an accurate measurement.
“Labour has not told us clearly what the figures provided from First Utility represent so it is not possible to make a definitive assessment of the validity of the comparison,” the spokesperson said.
“They are described as a ‘one year forward price for a domestic consumer’, but it is not clear what they have assumed or included in arriving at that figure.
“If the figures are based on baseload wholesale electricity prices, one year forward, then it would be necessary to take into account a whole range of other factors to arrive at a cost of electricity per unit supplied.”