Ofgem to roll out new measures to reform energy sector
Ofgem could reduce the six-month review period for the consumer price cap, after hitting UK households with a £700 hike in annual energy bills this spring.
The market regulator is set to roll out new measures tomorrow, as it looks to reform the industry to make suppliers more resilient to market shocks and ease the burden facing households following its painful adjustment to the price cap.
It has revealed it will introduce an uplift in the the price cap’s wholesale cost allowance, and announce changes to its licence conditions so it can update the price cap more regularly.
Jonathan Brearley, chief executive of Ofgem, said: “Ofgem is working to stabilise the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future. “
Ofgem is already committed to hedging controls and fit and proper person tests for suppliers, to improve the governance of energy firms.
The group will also publish its consultation on the price cap, following frequent criticism about its role in the past four months of market carnage which has led to the collapse of dozens of energy firms.
Dozens of suppliers have crashed out of the market this winter, having been unable to deal with the combination of soaring wholesale costs and the limits of the consumer price cap.
Ofgem’s latest update on the price cap also revealed that consumers are enduring a £68 increase in their energy bills from costs involved in the supplier of last resort process.
Utilita Energy founder Bill Bullen and ScottishPower CEO have both recently called for the cap to be reformed.
In recent months, the market regulator has also been accused of failing to regulate suppliers effectively by Citizens Advice, and has been slammed by think tanks such as the Institute of Economic Affairs for meddling too much in the market.