Should utility bills be tested for affordability?
Remember the good old days when all utilities were nationalised? When we all got to share in any profits made, rather than an elite group of (offshore) shareholders? Still, private profits were a small price to pay for all the efficiencies of private ownership, clearly. Just ask Royal Mail.
Of course, firms providing energy and water services, for example, do not have it all their own way. In the UK they are watched over by a regulatory body like Ofwat or Ofgem who make sure they take proper care of their customers, and one of the things the regulator regulates is the prices charged for these essential services.
However, the regulators have recently come under fire from MPs who think that they really ought to take affordability into account when setting maximum prices- and specifically the cumulative effect of lots of increases on unavoidable household bills.
Labour MP Austin Mitchell challenged Ofwat and Ofgem to disclose how they involved water and energy customers in their deliberations over companies' pricing and investment proposals when they appeared before the Commons Public Accounts Committee , saying the regulators “don't take any account of the way consumers are being struck by other utilities.”
Ofwat chief executive Cathryn Ross claimed Ofwat were “absolutely taking affordability into account” but then admitted that when they “produce our final determinations for prices, are we doing that consciously looking across expected energy bills, expected rail fares and all the rest of it? No, I'm afraid not.”
Ofgem's interim chief executive Andrew Wright said: "We require companies to understand what consumers' priorities are. That will take account of how consumers are feeling, their willingness to pay for improvements and so on.” He didn’t, however, have much to say on whether Ofgem asked people if they could afford their current energy bills, let alone ones subject to a price increase. Perhaps he didn’t fancy the likely answer.
Npower in particular were singled out as not giving a fig, after chairperson Margaret Hodge complained about Npower Chief Executive Paul Massara’s failure to turn up: "What is he doing that is more important than accounting for himself through Parliament to his customers? Where is he now?" adding ineffectually “I don't think we take to that very kindly."
However, ranting by MPs and the Public Accounts Committee might make things more public, but doesn’t necessarily get anything done. Just ask any of the grilled multinational corporations and accountancy firms if they have now seen the errors of their tax-avoiding ways. Nevertheless, some communication between regulatory bodies would be useful to consumers- if a bit too common-sense to ever see the light of day.