JH- Joel Hills, Sky News Business Presenter

JF - John Fingleton, former head of the OFT  

JH– You say “OFGEM should refer the energy industry to the Competition Commission immediately or be stripped of its power as the regulator”. Why do we need a competition investigation?  

JF – There are at least two serious issues with the energy market. One is pricing and pricing transparency for consumers, consumers knowing if they’re getting the best value and consumers switching and this is one long-standing issue.  The second is the vertical integration of the energy companies and whether it is really possible for anybody to enter the energy market and I think both of those are serious competition concerns and they matter for consumers.  

JH – But OFGEM is on this: it’s limiting tariffs, it has conducted two reviews of the market and it’s dealing with transparency. The government has faith in the regulator, why don’t you?  

JF – OFGEM hasn’t looked at all at the vertical issues, first of all, and the structure of the market and there’s a question – as with airports and with other markets – as to whether energy companies should be allowed to stay as big as they are. Secondly even though it’s looked at tariffs what it (OFGEM) has done is rather than move more towards market consumer choice, they’ve actually put more and more regulation in place and I think there a very strong case for looking at all that from the beginning and taking that away from the companies and the sector regulator and giving it an independent  look.  

JH – What is a Competition Commission investigation going to do for consumers. It’s not going to put an end to price rises is it?  

JF – I think what it’s going to do is at least assure consumers that the market us working well…  

JH - But OFGEM, the regulator, tells us competition is working well.  

JF – Well I don’t think that either consumers or politicians have complete trust anymore in the market and consequently I think it’s very difficult for OFGEM to win back that trust given where we’re at now.  

JH – OFGEM is never going to refer this to the Competition Commission is it because if it does so it is more or less admitting that it has failed to do its job  

JF – The Office of Fair Trading referred the airports to the Competition Commission – that wasn’t a failure by the regulator. I think there comes a time in a lot of these markets when having an independent investigation - politically independent and independent of the regulator of the market - is the right thing to do and I think this would be right.  

JH – You are clearly of the view that the regulator has failed to regulate this market properly aren’t you?  

JF – I think regulator has gone as far as it can go in this market with regulation and it hasn’t worked in satisfying politicians or consumers that the market is working well.  

JH – Politicians have come up with solutions. Labour has its “price freeze”, the government has come up with its “lowest tariff” pledge. Which of those solutions do you prefer?  

JF – I don’t think either of them really works terribly well. The lowest prices tariff is a very attractive idea in principle but of course the energy companies will withdraw the lower price tariffs in the market  and therefore it’s not clear that consumers overall benefit from that. The price freeze is particularly problematic because it incentivises the energy companies to raise prices now so they’ve got their retaliation in first and I that overall I think this type of political of politicians searching for solutions creates a great deal of uncertainty for investors.  

JH – Absolutely and consumers. Spare a thought for SSE customers. The company is telling them “look we’re just passing on costs”, politician are accusing the company of effectively profiteering. What should they (customers) think?  

JF – it is very possible that SSE would have been putting up prices now in any case but we don’t now if they would have been putting them up by as much (or whether) they would be putting them up more because of Ed Miliband’s comments. We don’t know what they’re doing for individual tariffs and tailoring them to deal with the “best (sic) tariff” offer and consequently as a consumer it’s very difficult to trust that you are getting value in this market.