The committee said that consumer fears regarding uncompetitive energy prices were justified given the lack of clarity that characterises the sector.
Speaking on the issue, Sir Robert Smith, chair of the select committee, said: “At a time when many people are struggling with the rising costs of energy, consumers need reassurance that the profits being made by the big six are not excessive.
“Unfortunately, the complex vertically integrated structure of these companies means that working out exactly how their profits are made requires forensic accountants.”
Ofgem should ‘use its teeth’
The MPs singled out the UK energy regulator for failing to protect consumers from high prices and employing a “relatively light touch approach”.
John Robertson, who on the committee, said: “Ofgem needs to use its teeth a bit more and force the energy companies to do everything they can to prove that they are squeaky clean when it comes to making and reporting their profits.”
Responding to criticisms senior partner for markets at Ofgem, Rachel Fletcher said: “We agree with the committee that suppliers have been poor at communicating with their customers. That is why Ofgem has taken the lead in pursuing transparency across all sections of the energy market, [making] energy companies produce yearly financial statements, which have been reviewed twice by independent accountants and found to be fit for purpose.”
Tackling fuel poverty
The committee also criticized the government for not doing enough to help those recognised as living in fuel poverty. The MPs suggested amending the current system, which sees energy companies provide subsidies for ‘fuel poor’ households, to make it the taxpayers’ responsibility to provide funding.
The reasoning behind the proposal is that a general tax-backed subsidy would help shield vulnerable households from energy price increases.
National Energy Action (NEA), a charity focused on eradicating fuel poverty, released a statement alongside the committee report: “Current measures to address the level and depth of fuel poverty do not constitute an ambitious strategy. It is therefore crucial that in the coming months the Government accept there is an urgent need to address well documented deficiencies with the current approach and ensure that there is adequate and proportionate assistance which is accessible to all fuel poor households to protect them from rising energy costs.”