The UK’s big energy suppliers have urged the government to reverse part of its energy prices bill, saying it grants “extensive” new powers to ministers and puts billions of pounds worth of investment in jeopardy.
The bill, which is making its way through parliament, was introduced as part of efforts to reduce household costs and address the broader energy crisis.
But in a letter to the business secretary, Jacob Rees-Mogg, companies including EDF, Centrica and Octopus said they had been “alarmed” to find that the bill grants “extensive new powers for ministers in relation to the regulation of the sector”.
It follows a report by the Guardian that energy companies had privately raised concerns with the business department that the bill contained proposals that would effectively allow the government to overrule the regulator, Ofgem.
Ofgem is responsible for overseeing every element of a supplier’s licence, from ensuring vulnerable customers are correctly handled to rules governing smart meters.
The letter says the energy sector has a “long-established principle of strong, independent regulation” and that decisions by the regulator need to take into account “what is best both today and over the long term”.
“It is a challenging and demanding role balancing protecting the interests of customers with the need to ensure that companies can finance their activities and be operationally resilient,” it said.
The letter added that energy companies plan to invest up to £100bn in the UK by 2030, but that that investment will rely on a “strong, stable regulatory environment”.
“Investors assess opportunities to invest in different countries based on relative levels of stability and confidence – especially in an industry where long timelines are essential to business cases,” it said.
“If the UK is viewed as less stable, investment will either go elsewhere or the costs of investment will rise.”
The letter also noted measures in the bill that would grant the business secretary the power to modify the licences of energy companies and the conditions under which they are granted, saying they have the “potential to impact just about everything energy companies do on an indefinite basis”.
“It is our view that the bill must now be reconsidered and amended so that it is solely focused on ensuring that crucial support can be delivered for households, businesses and other non-domestic consumers this winter,” it said.
It comes after another letter to the business secretary sent last week by Darren Jones, the chair of the business select committee, raising similar concerns and calling on the government to set out the “rationale for such wide ranging powers” and the circumstances in which it expects to use them.
A government spokesperson said: “We strongly disagree with this assessment. The energy prices bill ensures the necessary powers – the majority of which are time limited – are available so vital help with energy bills can be effectively and efficiently delivered to households and businesses this winter. The bill does not undermine regulation of the energy market, which remains the responsibility of Ofgem.”
