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Is Ofgem strong enough to take on the UK energy companies?

Today's news that Ofgem believes UK energy companies are overcharging customers has received a lukewarm response in many quarters. Consumers and businesses have for many years believed that they were being overcharged by the energy companies who for example moved their prices higher as the price of oil rose yet refuse to reduce them when the price of oil declined. So is Ofgem strong enough to take on the UK energy companies?

The real problem regarding UK energy companies is the power and sway they hold, not only in the business arena but within the political arena. The UK government is desperate to receive financial and practical assistance in building the next generation of UK power plants and to this end it needs the assistance of UK energy companies. As a consequence, Ofgem has nowhere near the power it needs to regulate the UK energy markets and the UK government is wary of stepping in and "rocking the boat".

As you might have guessed, UK consumers and UK businesses continue to be hit by ever rising energy costs despite the fact that many energy companies had promised to reduce their prices in the short to medium term. The response by British Gas to today's announcement just about sums it all up, warning customers and businesses that prices are likely to rise higher in the short to medium term and are unlikely to fall back.

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