Source · Select Committees · Business and Trade Committee
Recommendation 56
56
Acknowledged
Paragraph: 218
A systemic failure in regulation left the energy supply market, and ultimately taxpayers, more exposed...
Conclusion
A systemic failure in regulation left the energy supply market, and ultimately taxpayers, more exposed when the global wholesale energy crisis began. Some energy supplier businesses were allowed to behave in an entirely unacceptable way, without any consequence for their actions. The Government prioritised competition over effective market supervision, failing to recognise the fundamental importance of energy supply and maintain sight over Ofgem’s actions. Ofgem’s failure to regulate and supervise the energy retail market over the last decade significantly contributed to the collapse of 29 energy suppliers since July 2021. Ofgem did not enforce the rules that were in place and did not understand the business models of the suppliers it is mandated to supervise.
Government response summary AI-generated
BEIS maintains a regular dialogue with Ofgem to review lessons learned and understand where policies can be enhanced to improve outcomes, and will work with Ofgem and relevant bodies to understand if there are any gaps within the current regime which prevent unfit conduct by energy company directors being appropriately addressed.
Summary of the government's response below — read the verbatim text to verify.
Paragraph Reference:
218
Government Response
Acknowledged
HM Government · verbatim extract
Acknowledged
Ofgem agrees with the Committee’s overall assessment of the weaknesses of the previous regulatory framework, and acknowledges that this did not adequately protect consumers from the consequences of the unprecedented increase in wholesale energy prices. It is clear that the regulatory framework was not sufficiently robust in areas such as financial resilience, governance and accountability, and that regulatory action should have been taken earlier to address emerging risks in the market. The lessons learned from this period have led to a major programme of regulatory reform which has already begun. Ofgem has significantly strengthened its regulatory oversight, including new and enhanced measures to protect consumers, as well as a more proactive and interventionist approach to monitoring and enforcement.
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