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OFGEM director calls for two-tier energy market to improve affordability

Graham Watson

7th September 2022

A former director of OFGEM, Christine Farnish argues here that the regulator "favoured suppliers over consumers", implying that there's been a degree of regulatory capture.

She also sets out what she would do to tackle the energy crisis, believing that all households should get energy at an affordable price, which is interesting because implies that the market for energy has failed.

Read the article here: Households should get energy at an affordable price, says former Ofgem director

And here are her suggestions for reforming the market: the creation of a two tier market - one market providing a universal amount of energy to consumers at a regulated price; a more competitive secondary market, which looks to become more efficient, more dynamically efficient and better suited to the modern world; the abolition of 'standing charges' - which she believes to be outdated, regressive and no longer fit for purpose.

All of this is interesting stuff, and unlike many at least she's humble enough to admit that it might not be a perfect solution and that others might be able to refine and develop even more appropriate solutions to the energy crisis.

In related news, the Legatum Institute have forecast a significant rise in poverty, even if energy bills are capped at their current levels. They believe that an additional 1.3 million people would enter relative poverty, and if this were the case, they argue that there's a strong case for raising Universal Credit.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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