Dieter Helm, who wrote a review of the Cost of Energy in 2017, took issue with ministers trying to shift the blame to Russia’s invasion as he attacked the “broken” privatization model for energy and water. On a visit to Kyiv last week, Boris Johnson argued that Britain was suffering mounting bills as a price the West must pay to resist Moscow’s aggression. The outgoing prime minister said: “We know that if we pay our energy bills for the evils of Vladimir Putin, the people of Ukraine are paying with their blood.” But Sir Dieter pointed to a market system that is not “fit for purpose”, arguing that it mis-prices the cost of natural gas – also providing “extraordinary profits” to renewable energy producers. Average bills will jump to £3,549 in October – and are forecast to top £5,300 from January – despite the UK importing almost no gas directly from Russia. “Customers facing high bills are paying too much because the government has failed to reform the market,” he told the Financial Times. The former consultant, now an economics professor at Oxford University, argued that both energy and water are “too essential to be treated like any other commodity”, as privatization has enabled. The sectors were undermined by “revolving doors and pork-barrel politics, heavily influenced by vested interests, with an interest in complexity, which is a lobbyist’s dream”. This had led to the “inevitable consequences of poor regulation and poor outcomes for customers”, added Sir Dieter. It called for both Ofgem and Ofwat, the watchdogs for energy and water respectively, to be abolished and replaced with new stronger regulators for each whole system. It follows fury over water companies dumping sewage into England’s rivers and seas and implementing pipe bans while failing to plug leaks that are wasting supplies – and paying their bosses exorbitant sums. The Independent has revealed how Liz Truss failed to hold meetings with water bosses about the dumping of raw sewage in two years as environment secretary, despite the practice being ruled illegal. The potential next prime minister is in the firing line over the sewage scandal after records revealed her only conversations were to discuss a bug linked to serious stomach upsets. “It is no coincidence that both the water and energy privatization models have faced serious problems. After more than 30 years, neither is fit for purpose. Neither do their regulators,” Sir Dieter told the Financial Times. On energy, he added: “Ofgem is not the right vehicle. Energy needs regulation of the system, not institutional confusion with Ofgem in general.” But Ofgem said: “We are confident that Ofgem’s regulation is strong, tackling any unfair practices by suppliers and putting consumer protection at the heart of what we do.” Ofwat declined to comment to the newspaper.
