Ofgem chief Dermot Nolan to not receive bonus as MPs liken him to ‘a bystander, rather than active participant in the market’

The head of the UK energy regulator has said he will not receive his bonus, as he came under pressure from MPs who accused him of being a passive bystander and failing to prevent millions of customers from paying over the odds.

Dermot Nolan said he would not get his £15,000 bonus this year as he admitted he had not acted quickly enough to help households get off the most expensive tariffs or impose price protections for them.

The chief executive of Ofgem apologised to vulnerable customers for not capping their bills earlier. He also said the decline in the percentage of people on poor-value default tariffs had not been as dramatic as he hoped.

Rachel Reeves, the chair of the business, energy and industrial strategy select committee, said: “It’s not about what you hoped for, you’re the regulator for the energy companies. My children hope for lots of things from Father Christmas; they can hope, they don’t have much impact on what Father Christmas delivers in their stockings.

“But yours isn’t about hope; you are the regulator, you are the person who is delivering or supposed to be delivering on this. The whole language you use is like a bystander, rather than an active participant in the market.”

Peter Kyle, the Labour MP for Hove, said: “Your testimony sounds so incredibly passive. Do you ever roll your sleeves up and really get stuck in? I don’t see any evidence of that.”

Nolan replied: “I apologise if I seem passive, I honestly do not feel passive … I wish we had moved earlier in putting price caps in.”

Reeves asked how he could justify Ofgem staff being awarded nearly £1m in bonuses this year when Nolan had admitted the regulator could have done more and some vulnerable customers were paying too much.

He said it was justified for other staff because a large proportion of Ofgem’s work was not in the retail sector that supplies households, but for himself, he accepted her point and would not receive his bonus.

The decision was made by the regulator’s remuneration committee. Nolan received a £15,000 bonus in 2015-16 and 2016-17 on top of his £190,000 salary.

On the energy price cap Theresa May has promised, he said legislation would need to be given royal assent before the parliamentary recess in July if the protection were to come into effect by Christmas 2018.



He also admitted he thought it was possible some tariffs would go up under the cap on standard variable tariffs and switches between suppliers may fall. “I cannot guarantee that some prices will not rise,” he said.

Nolan said he expected the gap between the cheapest and most expensive tariffs on the market to fall from the £200-£300 found by the competition watchdog in 2016 to about £50-£100 by 2023. That is the latest date the cap can be extended to, under the draft legislation.

He also made it clear that while he was committed to implementing a cap, he was not a fan of them. “I remain of the view that effective competition in the long run is better than a regulated market,” Nolan told the committee.

Official figures revealed on Thursday that a record 5.5 million people switched energy supplier in 2017, up 15% on the year before. Energy UK, the lobby group that represents the big six and other suppliers, hailed the numbers as evidence competition in the market was working.

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