Energy competition has two years to prove itself before “other measures would be necessary,” Ofgem chief executive Dermot Nolan has told Utility Week.
Asked whether competition is still the right model for the energy retail market, Nolan said: “I think broadly yes, but I think it has to prove itself and I think one of the tests for the next couple of years is seeing whether or not competition can deliver.”
He said competition is “very much the goal we’re still working towards,” but added: “I could certainly foresee possibilities where we felt that really that individual engagement issue had not proven as effective and other measures would be necessary and we are certainly thinking about those.
“If the individual engagement, with all the remedies applied, with every effort made to make the market as efficient as possible and break the two tier system hadn’t worked, then I think we would very much need to be open to other ideas.”
Asked how competition could prove itself, Nolan cited switching figures, ease of switching and switching technologies, the level of consumer savings, and the variation between tariffs on the market.
Ofgem is expected to consult later this month on extending its current price cap for customers on pre-payment meters to all vulnerable customers. Nolan has previously made clear his view that introducing a price cap across the whole market, as called for by more than 50 MPs, is a matter for government rather than the regulator.