A director of Ofgem has quit in protest at its decision to add hundreds of pounds to household bills this winter by changing the way it calculates
the energy price cap.
Christine Farnish said she had resigned because did not believe that the regulator had “struck the right balance between the interests of consumers and the interests of suppliers”.
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Ofgem announced earlier this month that it was changing the methodology of the cap to enable suppliers to recoup wholesale energy hedging costs sooner. The regulator insisted the change was necessary to prevent more suppliers going bust, after the costly failure of 29 companies over the past year.
It is understood that Ofgem analysis suggested all bar two of the remaining suppliers could either go bust or exit the market if it didn’t make the change.
Analysts at Investec estimated that the methodological change would add more than £400 to the level of the price cap in January, taking it to an estimated £4,200 a year, from £1,971 at present.
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Farnish, a former chairwoman of Consumer Focus, acknowledged that decisions over the price cap were “never easy” and that Ofgem had to “weigh up a number of factors such as the sustainability of the market, the likelihood of supplier exits and the costs associated with that, and the impact on consumer energy bills”. But she said Ofgem’s board was “charged with an overarching legal duty to protect the interests of consumers”.
