Utility Week

14 | MARCH 2023 | UTILITY WEEK Regulation Comment What's wrong with Ofgem? Y et again Ofgem is in the headlines accused of being asleep at the wheel, this time around forced prepayment meter installations. It should not have been hard to anticipate that with more customers struggling with bills prepayment was going to become an issue – and fuel poverty groups were raising concerns back in the summer. But Ofgem was being assured by suppliers that all was well. A major cause of the problem seems to be the use by suppliers of sub-contractors paid piece rate for the number of prepayment meters they install. This is redolent of the problems the industry had with doorstep selling a decade ago and warning bells should have been ringing – but that cor- porate memory has been lost from Ofgem (and seemingly from the suppliers). This latest crisis also has echoes of the serious criticisms levelled against Ofgem by the Department of Business, Energy and Indus- trial Strategy (BEIS) Select Committee last sum- mer around supplier failures, with Ofgem described as incompetent, failing to under- stand supplier business models and failing to enforce its own rules. Major concerns were also raised about the lack of discussion and oversight by the board of signiƒ cant decisions. Again on prepayment meters, Ofgem is being accused of being too slow and too ready – in the words of Caro- line Flint (chair of the Committee on Fuel Poverty) – to give suppliers the beneƒ t of the doubt. This was also the reason Christine Farnish gave for standing down from the board last year – that it was too focused on suppli- ers' interests and not enough on consumers. Well-resourced industry players will always have more opportunities for inˆ uence with the regulator than under-resourced consumer or environmental groups. To combat it as a regulator you need to seek out and listen doubly hard to those other voices, to tune your antennae to pick up early warning signs. The rapid turnover of sta‰ at Ofgem will not have helped. It means Ofgem people are particularly dependent on the companies to explain how things work and to help them get up to speed. In the various re-organisations over recent years little value seems to have been placed on the experience that can help in anticipating issues, knowing how things really work in the companies or even simply judging when companies are blu‹ ng. suppliers of sub-contractors paid piece rate for the number of prepayment meters they install. This is redolent of the problems the industry had with doorstep selling a decade ago and warning bells should have been ringing – but that cor- porate memory has been lost from Ofgem (and seemingly from the suppliers). This latest crisis also has echoes of the serious criticisms levelled against Ofgem by the Department of Business, Energy and Indus- trial Strategy (BEIS) Select Committee last sum- mer around supplier failures, with Ofgem described as incompetent, failing to under- stand supplier business models and failing to enforce its own rules. Major With the controversy over forced installations of prepayment meters, Ofgem has again been wrong- footed by problems it should have been able to anticipate, says Maxine Frerk.

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