No need to stick the boot in

Ofgem chief Alistair Buchanan once claimed in a radio interview that he would go after the energy suppliers wearing his "regulatory hobnailed boots" if they didn't play fair with the consumers. His interviewer likened his bravado to that of the "cowardly lion". It was all very embarrassing and entirely misleading, because Buchanan had no hobnailed boots - neither metaphorical nor real.

We really could do without regulators, politicians and journalists doing what they so often do in using energy stories to score points with yah boo comments and cheap shot reporting. It’s especially damaging now because British consumers need to understand some difficult issues relating to energy bills (the Green Deal, smart meters, the need to replace old coal and nuclear power plants, etc). Clarity is what is needed, not wounding soundbites.

Media and political reaction this week to a couple of energy stories brought this to mind. First up was the tale that a price reporter had unearthed dodgy dealing in wholesale gas trades and blew the whistle. Up went the media cry: energy companies rig the wholesale market and use the price increases to justify higher bills (except in last week’s instance, the wholesale price was lowered). Close Ofgem, cried Labour.

Next was SSE’s posting of a 40 per cent rise in its interim group profit. Cue media and political fury and trade union calls for price regulation.

As occasionally happens, broadcasters invited Utility Week to go on air “to explain”. Being a helpful sort, I trotted down to the radio and TV studios to answer some questions. The questions were predicated on the notion that energy companies are evil and Ofgem can’t regulate an oven.

No-one wanted to hear that the allegedly bogus trades might not have affected bills significantly. Or that SSE’s profit rise followed a thumping loss of £100 million last year in retail. Or that Ofgem only regulates about a quarter of the energy bill. This is not the stuff of headlines.

Journalists won’t change. But it has to be noted that it is the scent of fudge and waffle that gets newshounds baying loudest, so it comes down to the industry, the government and the regulator to provide a clear and honest story.

Consumers need and deserve clarity and honesty because they are being asked to absorb a bundle of government and regulatory reforms in energy. So when the Energy Bill emerges shortly, it would be marvellous to see the squabbling within the coalition edited out to reveal a clear strategy along with a meaningful indication of its cost to consumers. We can do without the sort of disingenuous and preposterously precise pledge proffered by the previous energy secretary that “overall the average household energy bill in 2020 will be £94 lower than without energy and climate policies”.

It is that sort of absurdity that, as much as anything else, is behind the surge of indifference in the Green Deal. Further outpourings of nonsense and distortion will result in a level of consumer engagement with energy market initiatives that will make the Police Commissioner election turnout look like a stampede.

Trevor Loveday

This article first appeared in Utility Week’s print edition of 23rd November 2012.

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