Energy firms split after Ofgem slams price cap

NICHOLAS EARL

ENERGY bosses are split over the role of the price cap in the UK’s retail market –with a seeming rift emerging between challenger suppliers and Big Six companies over its role in protecting households from high bills.

Ofgem’s chief executive Jonathan Brearley has urged ministers to reconsider whether the “very broad and crude” price cap is still fit for purpose following the domestic energy crisis –which saw the collapse of 30 suppliers, including the year-long de-facto nationalisation of Bulb.

The price cap prevented suppliers passing on soaring wholesale costs to customers, contributing to the industry volatility which saw dozens of small energy firms exit the market, costing households an estimated £2.7bn in the winter of 2021 before the price of the cap was updated the following April.

But the watchdog boss is uncertain the mechanism is functioning as intended –to prevent long-standing customers being exposed to higher bills.

“The price cap was designed for a market that was much more stable,” Brearley told The Guardian.

Nigel Pocklington, CEO of challenger

supplier Good Energy, welcomed Brearley’s “support for a wider debate on the future of energy price regulation”.

He told City A.M.: “[The price cap is] beginning to actually harm consumers...

I think it has failed in its actual objective because it helped drive competition out of the marketplace and impose extra costs on consumers.” working her notice period to ensure a smooth transition. It is also incorrect that Harvey Nichols is owned by Dickson Concepts which is a listed company in Hong Kong.” Malhotra joined the firm 25 years ago as a newly qualified accountant, quickly rising the ranks to become group finance director in 2010. She was promoted to the role of cochief operating officer in 2018, and with joint responsibility for leading the business before she was promoted to CEO in January 2020.

The energy boss instead wanted to see “greater consideration” for the idea of a social tariff –targeted support for vulnerable customers –with the government not expected to provide new packages of support for households in the coldest months of the year with energy bills still historically elevated.

This position is shared by Bill Bullen, CEO of Utilita, who told City A.M. last month the price cap was the “biggest single risk to supplier profitability”.

However, Octopus Energy boss Greg Jackson, which is home to nearly 5m customers, told City A.M. in June that a social tariff –which Octopus does not support –would fail to be a viable substitute to the price cap.

“We really cannot afford to see the world return to when bloated companies passed on massively swollen costs to bamboozled customers, it’s just not right,” he said.