The energy regulator has taken a virtually unprecedented step by questioning the Labour party’s grasp of electricity market reforms.
The independent body took the flak today for its plans to crack open the wholesale power market from both Labour’s Caroline Flint, the Shadow Energy Secretary, as well as the watchdog Which?.
Labour has battered the regulator for months about its performance and threatened to replace it if the party wins the next General Election.
Today Ms Flint claimed Ofgem’s proposals to boost competition “yet again fall well short of what is needed”.
She said: “Instead of simply stopping energy companies doing secret trades between the generation and retail parts of their businesses, as Labour has proposed, Ofgem is tinkering around the edges with a whole host of complicated interventions which will be difficult to properly monitor and enforce.”
This prompted Ofgem to fight back, saying: “For the Labour Party and Which? to dismiss Ofgem’s fundamental reforms is to misunderstand the barriers to competition that we have identified and are tackling.”
It suggested the reforms go one better than the party’s own proposals: “In fact Ofgem’s reforms go further than Labour’s proposals for increasing liquidity, which they refer to as a pool.
“Labour’s proposals only relate to the short-term market, where the big six are already auctioning large volumes of power after pressure from Ofgem.”
The intervention is significant, given that Labour has pinned a sizeable chunk of its pre-election statements on rising energy bills – and because the regulator is technically meant to be neutral.
Ofgem added: “Independent suppliers have told us that it is difficult to buy power in the forward markets so they can hedge their position in the same way the Big Six can. That is why Ofgem is requiring the Big Six to publish the price at which they will trade wholesale power up to two years in advance and to sign-up to rules meaning they must trade fairly with independent suppliers or face fines.”