Business

Ofgem chief admits energy supplier market rules are not ‘ready’ for wholesale price shocks

Future UK energy suppliers will be subjected to a ‘strong stress test’ under proposals the industry regulator will publish the following Wednesday fierce criticism monitor their market, have seen 26 companies fail in just over four months.

Writing in Financial TimesOfgem’s chief executive, Jonathan Brearley, admits that the UK retail energy market has not been “elastic” enough to withstand the spike in wholesale gas and electricity prices since the summer, leading to a slump collapse of suppliers with nearly 4 million customers.

The crisis has prompted consumer groups, politicians and industry executives to call for urgent action in the health sector. 49 domestic suppliers at the end of June.

Regulations are “not ready to deal with a global shock of this scale,” Brearley said, with the clearest admission that the rules governing the sector are not fit for purpose.

Ofgem’s planned reforms will include more stringent stress checks on suppliers so they cannot pass “risk of nonconformity” to consumers, and “more checks”. for people “working in critical roles” at energy companies, he said.

“We urgently need a step change to put in place the rules and regulations needed to create a stronger, more innovative and more resilient, future-proof energy market so we can could change the way we run our energy businesses for good,” Brearley wrote.

The number of domestic energy suppliers in the UK has skyrocketed after 2010 from 12 to peak around 70 in 2018, as regulators and policymakers encourage greater competition.

But larger providers and consumer groups have long questioned the business model of many of the new entrants and whether some of their directors are fit to run service delivery companies. important or not.

The record increase in wholesale energy prices since the summer shows deep holes in the business models of many suppliers. Bulb, the largest supplier to fail with 1.6 million customers, has been bailed out by the government through a £1.7 billion taxpayer loan.

Brearley also promises “better use of data to help us make adjustments”. “We need a mechanism that can facilitate a sustainable market to accelerate our transition to net zero,” he added.

Last week, Citizens Advice accused Ofgem of a “Error Category” in market surveillance over the past decade. The consumer charity argues that the regulator has allowed “a culture where companies are free to follow the rules” and use customer credits, accumulated through via direct debit payments, to finance their businesses.

Brearley acknowledged the criticism from Citizens Advice, promising: “As a regulator, I want to help providers manage risk and weed out bad behavior as we see it. ”

However, Ofgem executives offer little comfort to consumers. He warned that the “full impact” of the increase in wholesale energy prices will be passed on to consumers when the regulator raises the price ceiling covering bills for more than 15 million households next April. Ofgem reviews the limit twice a year.

The wholesale price shock is also “by no means over,” Brearley said, at wholesale prices keep increasing across Europe this week.

“We will never be able to shield consumers from the full impact of a rise in wholesale energy prices and we expect these to make their way to the bills by April,” Brearley said. This will make customers who are under financial pressure extremely worried. “We will do everything in our power to help bring this situation under control.”

Source link

news7h

News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button