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August 21, 2014 12:01 am
The Labour party has said it will give a new regulator the power to revoke energy company licences if customers are mistreated, if it wins the general election in 2015.
Caroline Flint, shadow energy secretary, will announce on Thursday that a future Labour government would empower a new watchdog to cancel licences if there was evidence of “serious and deliberate breaches of their licence conditions which harm the interests of consumers”.
The party has concluded that fining firms for breaching conditions is not changing behaviour and Ms Flint, who announced in 2012 that the party planned to replace the current regulator, Ofgem, if it came to power, will say tougher penalties are needed because energy companies “too often . . . seem to view the regulator’s fines as a cost of doing business, not as a warning to get their act together”.
“The public has the right to be treated fairly by energy companies. Where firms fail to meet these standards, there must be tough and decisive action,” she will say.
The energy sector is still facing 16 probes of its practices, undeterred by fines totalling more than £87m it has had to pay since 2001, Ms Flint will argue, citing evidence obtained under the freedom of information act.
But the Conservatives called her reform a “gimmick” and said the government had last year given Ofgem new powers to force companies to compensate consumers for mis-selling and overcharging.
Under rules as they stand, the regulator does have powers to revoke licences in certain circumstances, including where companies have failed to comply with enforcement orders.
Ofgem said the announcement appeared to pave the way for an extension of its powers and that it was “always interested to work with government on any new powers or refinements to existing powers that would help to protect consumers”.
But Labour and the regulator are at odds over the figures on fines.
Ofgem says it has issued £102m in fines since 2010 and insisted its action against mis-selling in recent years had improved the situation for consumers.
Ms Flint’s announcement is the latest Labour attack against government policy as part of the opposition party’s summer campaign. It builds on Labour’s promise to freeze energy bills until 2017 if it wins the election.
The government last year responded to the price freeze announcement by reforming green levies added to customer bills, which it says reduces the average charge by £50 each year.
The Competition and Markets Authority initiated a full competition inquiry into the “big six” energy companies this year and will deliver its verdict, along with any recommendations for reform, at the end of 2015.
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