The debate over whether domestic energy should be subject to price controls has expanded.

Former regulator Professor Stephen Littlechild joined other ex-regulators in a letter to the Telegraph that said, “Retail energy price controls would have an adverse effect on a market that is working better than is generally realised – and would have ominous implications for other markets”.

Ryan Thompson, partner at Baringa Partners, argued that “a price cap is not the right solution to the problem”. He noted that ‘sticky’ customers “are effectively subsidising those who decide to switch” and added, “We must distinguish between customer groups who are less informed and less able to access the best deals … and those who are well informed but choose not to engage.”  He said, “Ofgem needs to expand its competitiveness criteria and place more emphasis on what suppliers are doing to consistently reduce overall customer spend – for instance through more innovative commercial models or use of smart services.”

Meanwhile the GMB union has called for energy bill caps, arguing that the competitive market has failed. Justin Bowden, national secretary for energy said, “The pantomime that passes for UK energy policy and energy bills regulation continues.
“GMB has always ridiculed the very idea of a competitive market in a natural monopoly because it is a contradiction in terms that we all pay for through our energy bills.
“Ofgem has been a purring pussycat for years and should be abolished with all its regulatory functions taken over by the government itself making its regulatory role subject to scrutiny and accountable to parliament with the powers to cap prices if deemed necessary.”

Gary Smith, secretary at GMB Scotland, agreed that the competitive market has failed. He said companies were not price-fixing. In fact, “The behaviour of some energy companies – especially the smaller ones – with frequent eye-watering increases, suggest companies are in real trouble.
“When small energy companies go bust it hits consumers and Ofgem then has to find a company to take on those consumers’ accounts.
“The introduction of competition was supposed to deal with the problems in the energy market and drive down prices. The strategy clearly isn’t working.”