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(Bloomberg) — The UK energy industry has called for the regulator Ofgem to be broken up citing a bloated organization, onerous interventions and its inability to prevent a series of energy supplier failures that added some £4.5 billion of extra costs to consumers’ bills in recent years.
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Industry group Energy UK published an assessment of the regulator in a report on Wednesday.
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The move comes as the UK government seeks to slash regulations and tame inflation to help drive growth across the economy. While investment in the energy sector is surging as part of the UK’s plan to decarbonize the power grid by 2030, stubbornly high consumer energy bills risk undermining public support for the initiative.
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“Systemic regulatory failures have left customers on the hook for billions of extra costs and a massive increase in red tape is holding back investment at precisely the time we need it most,” Energy UK’s chief executive Dhara Vyas said in a statement. “A smaller, more expert Ofgem will be better equipped to carry out its role.”
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Ofgem did not immediately respond to a request for comment.
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The paper cited numerous issues with Ofgem, including that its headcount has grown 120% in the last decade. That broader regulatory workforce oversees some 10,000 pages of energy industry codes that the group sees as burdensome. It’s meanwhile failed to take action in areas of need such as the rising level of household energy debt, the paper says.
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“While focusing on unhelpful proposals that increase bureaucracy for industry and arguably do nothing for consumers, its restrictions and lack of action on rapidly growing, and predictable, debt has contributed to an unfolding crisis,” according to the paper.
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The group proposes that Ofgem should only focus on regulation of energy infrastructure like grids and power stations. The Competition and Markets Authority could take on Ofgem’s existing oversight of consumer protection and competition regulation. And the government-owned Low Carbon Contracts Company could run other programs currently under Ofgem’s purview.
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