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You can’t help but wonder who was more relieved last week – the big six or Ofgem? The major energy suppliers escaped the price freeze that has been hanging over their heads for more than 18 months, while the weary regulator lives to fight another day. And that day will come soon, with the Competition and Markets Authority (CMA) now free to report its findings to a government that has promised to listen.
Whether the CMA will go as far as the Labour Party in recommending the chop for Ofgem is doubtful, but its early noises indicate that the unintended consequences of (over) regulation are on its radar just as much as the behaviour of the companies and the market structure.
As the industry and the newly elected government attempt to negotiate the dichotomy between free market solutions and ever more regulation, the former seems to be gaining traction. Certainly, Ed Miliband’s promise to “fix” the market by regulating for a price freeze wasn’t the vote winner he had hoped.
Amber Rudd’s appointment as energy secretary seems to signal continuity on policy, which will be welcomed by investors in particular, with Electricity Market Reform set to remain on course. One question is whether the Conservative government will make concessions to the SNP, which has called for changes to the transmission charging regime and joint oversight of Ofgem. Another is just how far the new government will go to foster fracking, with Rudd and chancellor George Osborne known to be supporters of unconventional gas extraction.
Meanwhile, the water sector is quietly giving the lie to Oscar Wilde’s famous adage that the only thing worse than being talked about is not being talked about. Water has flown far under the radar at this election and, given the experience of energy, that’s no bad thing. The companies have escaped Labour’s mandatory social tariff and are free to get on with delivering AMP6 and market reform for business customers. Those who whisper of the possibility of household competition following non-households in the years after 2017 may be heartened by the Tories’ return to Downing Street.
With the election finally over, and settled far more clearly than anyone could have imagined, it’s time to get on with business.
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