Energy price cap amount | Director of Ofgem Christine Farnish steps down due to price cap revision



A non-executive director at energy regulator Ofgem has quit over changes to the way the energy price cap is set.

The regulator, according to Christine Farnish, "had not achieved the correct balance between the interests of consumers and those of suppliers."


Every three months, Ofgem is responsible for determining the cap on domestic energy prices.


Ms. Farnish received praise from the watchdog "for her many years of committed work."


Ms. Farnish told The Times that she disagreed with the decision to alter the cap so that suppliers could recover some wholesale costs more quickly, a move that the regulator claimed would stop more suppliers from going out of business.


"Due to this unprecedented energy crisis, Ofgem is having to make some really tough decisions where carefully balanced trade-offs are being weighed up constantly," an Ofgem spokeswoman said.

But we always put the needs of consumers first, both now and in the future.


The regulator has come under fire for increasing the energy price ceiling this October, which is the most suppliers are permitted to charge domestic consumers in England, Scotland, and Wales for each unit of energy.


The cap is modified by Ofgem every three months based on the amount energy suppliers pay producers for electricity and gas. Its purpose is to shield consumers against sudden price changes.


Martin Lewis, a proponent of consumer rights, has repeatedly charged that the regulator "sells people down the river."


At the end of this month, the price cap for October is scheduled to be revealed.


Energy market researchers Cornwall Insight forecast that by this time, the typical yearly bill will have increased by £200 to £3,582.

Cornwall Insights anticipates that the cap will increase to £4,266 in January 2023, when it is scheduled to change once more.


According to the higher projection, instead of the present average household payment of £164 per month, £355 would be required.


Due to the invasion of Ukraine and the increasing demand for gas that followed the relaxation of COVID limits, energy prices have soared significantly.


Ofgem recently modified the rules so that the cap can be reviewed every three months rather than every six, claiming that this would reduce the likelihood of more energy suppliers going out of business and give consumers more time to benefit from any future price decreases.


In the UK, some 30 vendors have collapsed in the last 12 months.

A spokeswoman for Ofgem stated in response to Ms. Farnish's resignation that the remaining board members had determined that a quicker recovery period for energy bills was in "the best interest" of consumers in the "long run."


According to the spokesman, the modification lessened the "very real possibility of suppliers going out of business, which would add even more expenses to bills and cause needless stress and concern at an already challenging time."


We are aware of a resignation at the Board of Ofgem, which has been accepted, a government business department official said.


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