Another day, another review of the energy market. This time, government has asked Professor Dieter Helm from Oxford University to carry out an energy cost review and report back by the end of October.
It’s an extremely short timetable for Helm to analyse and then make recommendations on what is such a complex and highly politicised issue. And there is high risk that Ministers will not like the answer: that it is government’s own policies that are at fault.
The cost of energy is, of course, a long-running debate in the UK. Are bill payers being exploited by profiteering energy suppliers or being misled by Ministers over how much “green” policies are costing?
The accusations against suppliers are well-known, fed in part by a hungry media keen to shine the spot-light on corporate greed.
The culpability of government regulation is less well documented.
Energy market regulation is hugely complex, even for those of us working in the sector. Contracts for Difference; the Levy Control Framework; Capacity Market Auctions. Unsurprisingly none of these have entered the public consciousness, despite the fact we pay for them as part of our energy bills.
This lack of awareness is something that suppliers are now actively trying to shift – marking a new narrative and a new phase in government relations.
Earlier in the month, British Gas put its decision to increase bills firmly at the door of Ministers, releasing data showing that energy policies now make up a bigger share of household bills than wholesale prices. According to the figures, the cost of government mandates and policy has increased 104% since 2014, while wholesale energy cost has dropped 21% over the same period.
Centrica’s Chief Executive, Iain Conn, even went as far as calling for energy policies to be passed on as taxation rather than in bills.
Unsurprising that government rebuffed the accusation, with BEIS going on record to say they “didn’t recognise the figures”.
That British Gas, and other suppliers since then, are prepared to be so publicly critical of government tells a story of growing frustration at being public whipping boys for high cost energy. It also shows that the threat of political intervention is no longer enough for suppliers to toe the line, or so it seems.
And that is why suppliers were so quick to welcome Helm’s review, which in theory at least, should shed some light.
It’s a high-stake game. Of course government won’t enjoy conclusions that policy is to “blame”, particularly when the review forms part of the much vaulted Industrial Strategy and a broader commitment set out in the Conservative Party general election manifesto to have the “lowest energy bills in Europe both for households and business”.
Helm’s findings and recommendations can’t be swept under the carpet.
Indeed such is the political risk that some sceptics are already saying the review is being watered down by not taking into account the impact of some of the biggest policy changes, such as smart meters.
Whatever the outcome, Helm and Ministers have a tricky task ahead. Industry will be watching intently.