Utilita slams price cap reforms and calls for more winter bills support

THE PRICE cap is still “the biggest single risk to supplier profitability” the boss of Utilita Energy has warned, adding that he still had “no faith” in Ofgem’s oversight of the market.

Bill Bullen, chief executive of Utilita Energy, told City A.M. that increasing regulatory burdens such as the watchdog’s plans to tighten allowances for firms emerging from the energy crisis risked sapping the company’s balance sheet.

Ofgem has written several open letters to suppliers this summer, with Ofgem’s chief executive Jonathan Brear- ley calling on energy firms to make sure they were financially stable.

The regulator has also revealed plans to review the price cap formula, which includes cutting allowances for suppliers and handing money back to customers. The allowances for suppliers is currently set at six per cent for standard credit bills, one per cent for direct debits and 0.4 per cent for those on prepayment meters.

Allowances were factored into the price cap to help suppliers claw back funds from establishing hedging for new customers and ensure market stability, which is added onto households'’bills.

But now that gas prices are coming down, the regulator wants to reduce the allowance.

“Jonathan Brearley wrote an open letter two weeks ago where he said basically we’ve not been funding the costs. How can he now be lecturing us all about financial adequacy? He’s the one who’s drained my balance sheet. So it’s absolute nonsense –I have no faith at all [in them],” Bullen said.

He suggested that

Bill Bullen, Utilita Energy’s chief executive

Ofgem were “just playing with numbers in a spreadsheet” while also questioning whether Ofgem had sufficient expertise to call on suppliers to be more efficient.

“They don’t really know what an efficient business is, as part of being efficient is being agile and innovative and all of the things they don’t really want you to do because that makes you too different and too difficult to regulate,” the energy boss added.

A spokesperson for

Ofgem said: “The team at Ofgem closely analyse allowances for suppliers to ensure they can recover costs, while protecting customers from excessive costs.” Bullen has also called on the government to grant more financial support to help households with energy bills this winter.

“We are going to see a bigger problem with affordability this winter than we had last year,” he said.

A government spokesperson said it was “working with consumer groups and industry to assess the best long-term approach to helping vulnerable households, as part of wider market reforms”.