Director of Ofgem resigns over proposed energy price increase cap, A non-executive director at the energy regulator Ofgem has resigned in protest over recent modifications to the methodology used to determine the energy price cap.
Christine Farnish expressed her belief that the regulating body had “failed to strike the correct balance between the interests of consumers and the interests of suppliers.”
Every three months, it is Ofgem’s responsibility to determine the limit that will be placed on the amount that homeowners will have to pay for their energy expenditures.
The watchdog organization expressed its gratitude to Ms. Farnish “for her many years of dedicated work.”
Ms. Farnish stated to The Times that she did not agree with the decision to change the cap in order to make it possible for suppliers to recoup certain wholesale costs sooner. This is a step that the regulator has stated will prevent more suppliers from going bankrupt.
“Due to this unprecedented energy crisis, Ofgem is having to make some really tough decisions where carefully balanced trade-offs are being weighed up all the time,” said a spokeswoman for Ofgem.
The energy price limit, which is the maximum amount that suppliers can charge domestic customers in England, Scotland, and Wales per unit of energy, was increased in October of this year, and the regulator has received criticism for this decision.
Ofgem reviews the prices that energy suppliers pay producers for electricity and gas every three months and then adjusts the cap accordingly. The cap’s primary purpose is to safeguard consumers from fluctuations in prices that are only temporary.
Martin Lewis, an advocate for consumer rights, has already stated his belief that the regulator is “selling customers down the river.”
At the end of this month, an announcement regarding October’s price ceiling is expected to be made.
Analysts at Cornwall Insight, which specializes in the energy market, anticipate that the typical annual cost will reach £3,582 at this time, which is an increase of £200 compared to the prior projection.
Cornwall Insights anticipates that the ceiling will be raised to £4,266 in January 2023, which is the month in which it is scheduled to be modified once more.
The higher estimate indicates that the typical household would be responsible for paying £355 per month rather than the current amount of $164 per month.
The price of energy has grown dramatically as a result of an increase in demand for gas following the easing of limits imposed by Covid, as well as the invasion of Ukraine by Russia, which has jeopardized supplies from that country.
Ofgem recently altered the rules so that the cap can now be revised every three months rather than every six months. The organization stated that this would reduce the likelihood that additional energy suppliers would go out of business and enable customers to experience the benefits of any future price reductions more quickly.
In the past year, the United Kingdom has seen the collapse of approximately thirty different suppliers.
An Ofgem spokeswoman stated, in response to Ms. Farnish’s departure, that the remaining board members had reached the conclusion that a shorter recovery period for energy bills would be in the “best interest” of customers in the “long run.”
According to the representative for the company, the adjustment decreased the “very real risk of suppliers going bust, which would throw furthermore costs onto bills and bring needless stress and concern at an already very difficult time.”
A representative from the business department of the government issued the following statement through a spokesperson: “We are aware of a resignation at the Board of Ofgem, which has been accepted.”
Ms. Farnish did not wish to provide any further commentary.