Meddling While Rome Burns

Ofgem has laboured for many months on whether rising energy prices represent hanky-panky and today its report is before us. As part of our usual service to readers we have pre-digested the full 4 MB for you all.

On the positive side: lots of goodies for energy data buffs; several sound micro-points on small-scale anomalies that might bear fixing; opportunity taken to bash the Continentals again for not liberalising their markets; and the inevitable conclusion (*portentous drum-roll*) "no evidence of a cartel"

On the negative, and doubtless in an effort to match the dirigisme of the times, Ofgem has come up with something it calls "unfair price differentials".

And so, in NuLab press-release-speak, it proposes to "ban unfair price differences". (Does Alistair Campbell draft this stuff for them, or must the words 'ban' and 'unfair' appear in all edicts nowadays ?) More soberly, in the main text it suggests that "differences in charges for different payment types must be cost-reflective", and they may regulate to that effect. The have particularly in mind to help "more than 4 million customers without gas who currently have no access to the most competitive tariffs" (viz, the discounts available for buyers taking both gas and electricity from the same supplier)

To make the obvious points:

- in an industry where all players use the same infrastructure for the same regulated fees, nothing is more likely to result in all suppliers charging the same, than forcing them to be fully cost-reflective with no 'unfair' differences

- a discount for buying both gas and electricity would prima facie seem to be an entirely cost-reflective proposition anyway

- free markets have a way of sorting out irrational price-differentials (provided they don't constitute predatory cross-subsidy etc, which is illegal anyway)

In this day and age we should presumably give thanks that they don't propose to re-nationalise the lot. Not much pleasure, however, to be taken from the trend towards micro-meddling. Back to your knitting, Mr Ofgem: check out the EDF takeover of BE for us properly - and do something to keep the lights from going out !

ND