UK Energy Watchdog Eyes Changes to Price Cap Amid Energy Crisis

11 months ago 110

The British vigor regulator mightiness alteration the mode it caps bills for households arsenic a large spike successful state prices drives suppliers to failure.

The Office of Gas and Electricity Markets (Ofgem) has fixed nary details of what adjustments it mightiness marque to however the headdress is calculated, but volition acceptable retired its reasoning arsenic it launches a consultation adjacent month.

Energy bosses person been calling for a rethink of the terms headdress exemplary amid the state terms crisis.

At the infinitesimal the regulator caps the vigor bills of much than 14 cardinal households astatine £1,277 ($1,760) per twelvemonth connected average.

But a fivefold summation successful the terms of state has been truthful accelerated that suppliers are present having to wage much for vigor than the headdress forces them to merchantability it for.

In an open letter to suppliers connected Friday, Ofgem said “the unprecedented emergence successful energy prices this twelvemonth has changed the cognition of hazard and uncertainty successful this market.”

“In bid to support the interests of consumers, we indispensable guarantee that the regulatory frameworks, including the terms cap, afloat bespeak the costs, risks, and uncertainties facing the proviso companies we regulate,” the missive reads.

The consultation connected imaginable changes volition extremity successful February, and they could beryllium implemented astatine the opening of April, erstwhile the terms headdress is acceptable to change.

Even earlier imaginable changes, experts astatine analysts Cornwall Insight foretell that vigor bills volition rocket to £1,660 ($2,287) per twelvemonth for terms headdress customers.

The regulator besides said it plans to marque changes to the supplier of past edifice scheme, which steps successful if a supplier fails.

When a supplier goes bust, which has happened much than a twelve times successful the past 2 months, Ofgem appoints a caller institution to instrumentality implicit its customers.

This gives customers certainty that they tin proceed to usage their state and energy arsenic usual. However, it is often an costly process for the chosen caller supplier.

In bid to incentivise companies to volunteer, Ofgem allows them to assertion backmost immoderate of these expenses from the remainder of the industry—a outgo that is yet passed connected to each bill-payers successful Great Britain.

The watchdog said it plans to expedite the process truthful suppliers bash not person to hold for arsenic agelong to assertion expenses back.

In the wide-ranging letter, Ofgem besides said it intends to rise the barroom for what it expects from suppliers’ hazard absorption processes and perchance alteration conditions successful their licences.

And it plans to alteration the frequence astatine which suppliers person to wage a greenish complaint known arsenic the renewables obligation.

At the infinitesimal it is paid erstwhile a year, successful the autumn. But the large complaint has often been capable to propulsion struggling suppliers into nonaccomplishment portion they inactive beryllium ample sums to the regulator.

On Thursday, the UK’s contention watchdog upheld Ofgem’s erstwhile determination to halve the magnitude of wealth vigor networks could wage to shareholders, perchance saving every lawsuit astir £9 ($12.4) disconnected their bills.

PA

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