Head of UK’s energy watchdog Ofgem admitted it has almost no power to protect customers from greedy firms
Chief executive Dermot Nolan told MPs Ofgem has zero muscle over energy firms like nPower – who have announced 15 per cent bill hikes
THE head of Britain’s toothless energy watchdog admitted yesterday they were virtually powerless to protect customers from energy price hikes - days after awarding themselves a £1m bumper bonus payday.
Ofgem chief executive Dermot Nolan - who gave himself a £15,000 sweetener – told MPs the body had “no direct power” over firms like nPower – who have announced bill hikes of 15 per cent.
Pressed by MPs over recent price hikes, Mr Nolan said Ofgem had zero muscle to tell energy firms they must change their prices.
The £190,000 a year boss insisted it was up to customers themselves to “engage and switch” to get the best deal to avoid being hit by double-digit rises.
Earlier this month nPower said they would raise standard tariff electricity prices by 15% and gas prices by 4.8% from March 16.
Regulator Ofgem said the rises must be “justified” by the firm to its customers.
But grilling Mr Nolan, Commons Business Committee chair Iain Wright said: “I would expect Ofgem to determine whether justification is appropriate and reasonable, and if not – what will you do about it?”
Mr Nolan – who also admitted the market was “not working for all customers” - replied: “All we would do about is say that is not justified.
“I should stress we don’t have the power to tell Npower or any company to change its prices.
“We can speak in public about it – we rarely speak about specific companies but in this case we thought we should.
“We can say this seems unjustified to us. We can say the best response for customers is to engage and switch.
“We can put in place various measures which will make it easier to do that, but we have no direct power to say to Npower or any other company you must change prices.”
Ofgem, set up by the Government in 2000, has long been blasted for not doing enough to protect power customers.
Last night Tory MP and energy campaigner Dan Poulter said the watchdog was obsolete.
He said: “For too long the big 6 energy companies having been ripping off their customers, and Ofgem has repeatedly failed to act.
“As a regulator, it is no longer fit for purpose, as it appears to be on the side of the energy companies and not consumers.”
Mr Nolan’s reward was part of a total bonus payout of nearly £1million for Ofgem’s senior civil servants.
Chris Poulton, the £130,000-a-year acting boss of Ofgem E-serve and senior partner Sarah Harrison also got £15,000.
It came as Scottish Power boss Keith Anderson branded Britain’s energy market a “mess”.
One of the Big Six, Scottish Power is one of three firms to announce price rises this year.
Mr Anderson told the Financial Times ministers must decide if they want a competitive system or move to full price regulation because “a halfway house is a mess”.
British Gas are expected to announce their profits have soared from £1.1bn to £1.7bn tomorrow.