Ofgem should state the obvious: the best way to protect consumers is to have lots of cheap energy

When Ofgem was created 25 years ago, it had 300 staff and its remit was to regulate the energy sector and protect consumers. Since then, its headcount has swollen ten-fold and it would appear it has completely lost sight of its core purpose. 

This week Ofgem launched a review of energy bills to make sure that “increasing costs” don’t affect low-income households. Earlier this year, Jonathan Brearley, their CEO, said the review would look at “progressive billing”. In plain English, that means those on middle incomes picking up even more of the tab for the growing number of people out of work or on lower incomes. 

It is not even clear how this would be possible, since energy suppliers don’t know the incomes of billpayers. Are Ofgem really suggesting energy suppliers should be given powers to peer into the bank accounts of households and then adjust their bills accordingly?

To decide that our energy system should be an extended arm of the state’s redistribution unit is a deeply political position. It is an extraordinary overreach for an unelected, unaccountable regulator.

However, it also reveals what we all already know, but too few of those in positions of power are willing to say: Ofgem do not believe Ed Miliband’s promise to cut everyone’s energy bills by £300. In fact, they clearly believe bills will go up. 

Ed Miliband’s mission to make us almost entirely dependent on wind and solar farms by 2030 was sold to the public as the nirvana for cheap energy. The problem? It’s a huge, whopping lie.

If Miliband’s plans were really going to cause a “mind-blowing” reduction in energy bills, as he promised, why would Ofgem be attempting to push extra costs on the middle classes? Why would Miliband’s own Government have announced billions of pounds more spending to subsidise the energy bills of heavy industry? 

This year Miliband extended the subsidy contracts for wind and solar farms to 20 years – why would he be signing up to even longer contracts if the costs were truly going to plummet? 

The truth is that it is blindingly obvious that Miliband can’t cut bills with his plans. Last year, in his first offshore wind auction in Government, he signed up to prices almost 15 per cent higher than the average cost of electricity. Last week I revealed that on the first day of recess and away from parliamentary scrutiny, his Department quietly slipped out the maximum prices he is willing to pay at this year’s auction.

Guess what? The prices are even higher than last year, and on course to be the highest prices in a decade. 

It turns out that Ed’s plans to set out wildly unrealistic targets didn’t cut prices. It simply advertised to multi-million-pound wind developers that he would have to buy whatever they are selling no matter the price. These higher prices will be paid through our energy bills – Miliband hasn’t even tried to explain how locking us all into paying higher prices for longer will cut bills.

Driving up the cost of energy in the name of tackling climate change is mad. Families will be poorer here and all we will do is offshore our industry to China where they are still 60 per cent powered by coal – fewer jobs in Britain, yet more carbon in the atmosphere. 

This is the problem with our net zero legislation – green campaigners cheer as industry takes its emissions elsewhere. No AI in Britain? Well, isn’t that just wonderful news for our climate goals. 

Perhaps Ofgem is too blinded by its net zero duty to state the obvious. The best way to protect consumers is to have lots of cheap energy. Politicians cannot keep raising the costs of goods and services and expect an ever-shrinking group of people to cover the costs. Soon there won’t be anyone left to foot the bill.