Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/503238
UTILITY WEEK | 1ST - 7TH MAY 2015 | 11 E L E CT I O N C O U N TD O W N : 6 D AY S TO G O Lobby Election / Party conferences In partnership with: O ver the last parliament, Ofwat – and more recently Ofgem – have started the shi towards outcomes-based regulation, a "lighter touch" regime than the prescriptive, box-ticking exercise that pre- vailed thus far. It is intended to give utilities the freedom to deliver the best outcomes for consumers, and reduce costs at the same time. In non-regulated spaces, competition is the driver for good quality service, with cus- tomers free to move to a supplier – of water or energy – that they choose. However, politicians have taken issue with utilities, and their regulators, accusing them of failing to do enough for consum- ers. The result is the Competition and Mar- kets Authority's (CMA) investigation into the energy sector, and the potential remedy is either more regulation or more competition, depending on which camp you inhabit. Regulation answers In the final week of electioneering, we ask whether the parties want more regulation of utilities, or more competition. Labour is in the first camp and intends to regulate the market towards what it views as health. This includes forcing the regu- lator to make suppliers cut energy bills in line with wholesale costs, and threatening to remove licences should customer service remain poor – for either water and energy companies. The Conservatives and the Liberal Demo- crats are in Camp Competition. By encourag- ing competition – by increasing liquidity and pushing up obligation thresholds – the mar- ket will have the freedom to thrive. Making switching easier is also a major part of their plans – enabled via smart meters, a policy introduced by then-energy secretary Ed Mili- band in 2008. The role of the state, whether it steps back and becomes more hands off, or whether it directly intervenes in the market, rests in the balance as we approach 7 May. 7 May 3 Sep POLLING DAY CMA provisional findings in energy market inquiry 30 Sep CMA due to rule on Ofgem's distribution price controls Winter 2015 Labour would give Ofgem powers to force suppliers to cut bills CMA publishes final findings in energy market investigation Winter 2017 Labour's price freeze would end, and Ofgem would be abolished "We want to protect people from any more unfair price rises. That's what our price freeze enables us to do." Caroline Flint, shadow energy secretary (Labour) "Labour will head into the general election flogging a completely discredited policy of an energy price freeze." Ed Davey, energy secretary (Lib Dems) "Freezing prices to 2017 is a bold move… radical action is needed." Richard Lloyd, Which? executive director