Recommendations & Conclusions
59 items
1
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
Until June 2019, Ofgem granted energy suppliers a licence to operate in the market without ensuring they had access to sufficient levels of working capital, an acceptable business plan, or were run by individuals with relevant expertise. Ofgem’s delay to the Supplier Licensing Review was unacceptable and inexcusable which, if …
Government response. The Department for Business, Energy and Industrial Strategy has launched a cross-Government Affordability Sprint to share data and information on affordability, and Ofgem will support the new Prime Minister and Cabinet.
Department for Business and Trade
2
Conclusion
Third Report - Energy pricing and the f…
Accepted
The lack of ongoing requirements for suppliers operating in the market allowed thinly capitalised companies to rely on customers’ money to fuel business growth and operate with either no hedging or inadequate hedging against future energy prices. These companies took substantial risks to undercut responsible suppliers. The new rules put …
Government response. Ofgem accepts the recommendations of the Oxera report in full, including the development of consumer interest and competition frameworks, and will seek further views from stakeholders.
Department for Business and Trade
3
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
Oxera’s review of Ofgem’s performance to regulate the retail market raised serious and fundamental questions about the regulator’s ability to carry out its primary duties. We agree with its findings that Ofgem has no proper frameworks for defining and measuring what consumer interests are or what effective competition means, and …
Government response. Ofgem understands the Committee is eager to see the detail of its compliance and enforcement activity and actions and proposes to share this in due course, with a broader package of information requested in the Committee’s report, the annual report …
Department for Business and Trade
4
Recommendation
Third Report - Energy pricing and the f…
Not Addressed
We recommend that Ofgem implements the recommendations of the Oxera report in full to ensure that it has the proper frameworks for defining consumer interests and competition. We call on Ofgem to carry out rigorous quantitative impact analysis to underpin regulatory reforms and to make these publicly available for scrutiny. …
Government response. The response outlines the contents of a report to the Committee, not the specific actions recommended regarding Ofgem's frameworks, impact analysis, governance, and Board effectiveness.
Department for Business and Trade
5
Conclusion
Third Report - Energy pricing and the f…
Not Addressed
Even when matters of poor practice and potential breaches of licence conditions were directly reported to Ofgem, the regulator repeatedly failed to use its enforcement powers in any meaningful way. This was at the expense of customers who Ofgem is mandated to protect. Telephoning a supplier to tell it to …
Government response. The response only indicates that the government is addressing progress in respect of such companies, but does not address the core criticism of Ofgem's lack of enforcement.
Department for Business and Trade
6
Recommendation
Third Report - Energy pricing and the f…
Acknowledged
We call on Ofgem to make full and proper use of its enforcement and compliance powers to clamp down on rule breaking by suppliers, particularly relating to customer service standards. Ofgem should work with the Government to ensure it has the necessary complement of qualified staff working on its enforcement …
Government response. Ofgem has begun to consider the new powers that would be of benefit to consumers, including enforcement for unfit directors, the ability to appoint a third party to operate an energy supplier, the power to act against the parent company …
Department for Business and Trade
7
Conclusion
Third Report - Energy pricing and the f…
Whilst we have been reassured by Jonathan Brearley that changes are being made to the governance, leadership, and performance of Ofgem we remain deeply concerned that such negligent behaviour was able to take place for so long. If Dermot Nolan was still in post, we would be calling for his …
Government response. Ofgem and the Department have begun discussions to refresh the framework document in line with the requirements of His Majesty’s Treasury. We expect to publish the framework by December 2022.
Department for Business and Trade
8
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
Avro Energy improperly used customers’ money, including siphoning off customers’ cash to different businesses in the directors’ names, issuing loans to the directors, and paying poorly performing executives an unreasonably high salary. We were disappointed by the admission from Ofgem’s former CEO, Dermot Nolan, that the regulator was oblivious to …
Government response. Ofgem acknowledges the committee's concerns and notes that it has provided views to the Government regarding the Strategy and Policy Statement.
Department for Business and Trade
9
Recommendation
Third Report - Energy pricing and the f…
Not Addressed
We call on the administrators of Avro Energy to request that the Insolvency Service consider bringing action against the former Directors of Avro Energy specifically and to update us on what, if any action, can be taken to recover customers’ money.
Government response. Ofgem will develop an annual report for the Committee that includes measures to ensure effective accountability and transparency, key decisions, performance issues and policy concerns, a breakdown of the allocation of Ofgem resources, and a summary of the compliance and …
Department for Business and Trade
10
Conclusion
Third Report - Energy pricing and the f…
We further call on the Government to review whether regulators such as Ofgem should be given new powers to bring enforcement action for unfit conduct by energy company directors given the very limited scope for The Insolvency Service to do so. We consider this to be particularly important for energy …
Government response. replaced with a volumetric alternative based on usage. small reductions in bills for some low-income consumers, but would increase charges for customers with high consumption, many of whom are vulnerable. On this basis consuming customers with greater energy needs, for …
Department for Business and Trade
11
Conclusion
Third Report - Energy pricing and the f…
Accepted
We expect Ofgem, as the independent regulator, to clearly outline to Ministers and Parliament the risks and consequences associated with the delivery of Government objectives. We do not believe that Ofgem properly raised the risks to Government, or Parliament, that a deregulatory approach to promoting competition could severely undermine the …
Government response. Ofgem has worked with Government to introduce the Public Interest Business Protection Tax and is committed to working with suppliers and Insolvency Practitioners to ensure current rules and Consumer Protection regulations are adhered to.
Department for Business and Trade
12
Conclusion
Third Report - Energy pricing and the f…
Deferred
More significantly, we are concerned by the Government’s apparent lack of understanding of the extensive failings of the regulator and the consequences that this would have on the market in the event of any demand or supply-side shocks. 76 Energy pricing and the future of the energy market While we …
Government response. The government states that the matter is for the Government and does not address the committee's concern.
Department for Business and Trade
13
Conclusion
Third Report - Energy pricing and the f…
Not Addressed
We would encourage more robust lines of communication and a clear delineation of responsibilities between Ofgem and BEIS to ensure transparency and effective scrutiny.
Government response. The government states that this is a matter for Government.
Department for Business and Trade
14
Conclusion
Third Report - Energy pricing and the f…
We require Ofgem to start regularly and proactively reporting to the Department on how it is meeting its duties and to inform Ministers of any risks associated with the delivery of Government strategy. We ask the Department and Ofgem to review, update and publish a new Framework Document within six …
Government response. Ofgem launched its supplier stress testing regime earlier in 2022 and is analysing the responses to the second iteration ahead of winter. This forms part of Ofgem’s standard monitoring of supplier risk management practices, supported by regular requests for information …
Department for Business and Trade
15
Recommendation
Third Report - Energy pricing and the f…
Acknowledged
We recommend that the Government urgently publishes its long-delayed Strategy and Policy Statement for Ofgem to guide the regulator on how to manage the political and distributional trade-offs intrinsic to its responsibilities and clarify the split of responsibilities between Ofgem and BEIS.
Government response. Ofgem has been analysing responses to its policy consultation on Strengthening Financial customer credit balances and stress-testing and will share its revised analysis with the Committee.
Department for Business and Trade
16
Conclusion
Third Report - Energy pricing and the f…
Accepted
We recognise that this Committee has an important role in the scrutiny of Ofgem’s activity. We expect the regulator to be carrying out its core functions and delivering on its duties. It is neither feasible nor appropriate for Parliament to scrutinise, in real time, all aspects of Ofgem’s decision-making. However, …
Government response. The government describes the 2021 consultation between Ofgem and BEIS on supplier payment default under the Renewables Obligation, and indicates that Ofgem published a consultation in June this year which included measures to protect money collected to meet Renewables Obligation …
Department for Business and Trade
17
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
We are concerned that the costs of the Supplier of Last Resort process, which has been added to regressive standing charges on electricity bills, has increased affordability challenges for the most vulnerable customers, at the most difficult time. This is wrong. We welcome Ofgem’s recognition of the impact that regressive …
Government response. Ofgem is reviewing its approach to the Supplier of Last Resort levy in light of the Energy Price Guarantee and will update the Committee in due course.
Department for Business and Trade
18
Recommendation
Third Report - Energy pricing and the f…
Deferred
We recommend that the Government and Ofgem reform the Supplier of Last Resort process so that the costs are more fairly recouped whether through general taxation or energy bills.
Government response. The government will undertake a wider review of all elements of the energy price cap as part of discussions with Government on the future of price protection for consumers as the Energy Price Guarantee draws to a close.
Department for Business and Trade
19
Conclusion
Third Report - Energy pricing and the f…
Not Addressed
The Supplier of Last Resort process ensured that customers of failed energy companies maintained their supply. However, customers carried the risk of failure, while suppliers exited facing minimal costs, and in some cases, even made a financial return. Suppliers of last resort raised pressing concerns about administrators of Energy pricing …
Government response. The response discusses social tariffs and Ofgem's plans to refine distributional analysis, but doesn't address the concerns about the Supplier of Last Resort process, administrators acting in the best interest of customers, or the delay in sharing customer information.
Department for Business and Trade
20
Conclusion
Third Report - Energy pricing and the f…
We support the National Audit Office’s recommendation that the Government and Ofgem review and subsequently update the Supplier of Last Resort process to address the problems that arose over the last year, including delays in the transfer of customer information by administrators which prevented the retrieval of credit balances, the …
Government response. This is a matter for Government.
Department for Business and Trade
21
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
The Special Administration Regime has been used for the first time to deal with the failure of Bulb Energy, leaving taxpayers exposed to billions of pounds worth of costs. The decision not to implement a hedging strategy may have led to the sale of Bulb being less desirable and significantly …
Government response. Ofgem is working with the Department to ensure the development of a clear and coordinated roadmap for the future energy retail market to support the achievement of an effective transition to net zero in line with the targets set by …
Department for Business and Trade
22
Recommendation
Third Report - Energy pricing and the f…
Not Addressed
We recommend that the Government implements a hedging strategy at Bulb Energy. In the meantime, we ask that the Government provides us with detailed analysis of the cost implications for BEIS and the taxpayer of its decision not to purchase hedges to date.
Government response. The government indicates industry is making progress on implementation of market-wide half-hourly settlement, which Ofgem believes will be an important enabler of a more flexible, low carbon and low-cost energy system. This is not relevant to the recommendation about Bulb …
Department for Business and Trade
23
Recommendation
Third Report - Energy pricing and the f…
Deferred
We recommend that, given the size of Bulb, the costs of the Special Administration Regime are paid through general taxation, as opposed to recouping the costs from already stretched energy bills. The Government should undertake a review of the Special Administration Regime to consider how to reduce the cost exposure …
Government response. The government stated that this is a matter for the government.
Department for Business and Trade
24
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
We support Ofgem’s objective to ensure energy suppliers are well-capitalised and prudently run. If its plans to introduce a capital adequacy regime and improve its monitoring of suppliers’ approach to risk management are executed effectively, these measures could reduce the moral hazard in the market and the cost of mutualisation, …
Government response. Ofgem continues to work with suppliers and the Department to prepare for the implementation of an increased Energy Bill Support Scheme and the Energy Price Guarantee, providing support in scheme design, guidance, enacting Licence Condition changes and monitoring supplier compliance.
Department for Business and Trade
25
Recommendation
Third Report - Energy pricing and the f…
Not Addressed
Ofgem should publish detailed proposals that will ensure energy suppliers have a higher level of capital adequacy in the future which is in line with growth. Financial stress testing and monitoring of suppliers’ risk management strategies should be conducted by Ofgem as standard. Where individual or systemic problems are identified, …
Government response. The government intends to refresh the data used for distributional analysis, and all updated assessments will be shared with the Department and Committee when available.
Department for Business and Trade
26
Conclusion
Third Report - Energy pricing and the f…
Accepted
Our first priority is to ensure that customer credit balances are protected, so that in the event of a supplier failure, customers are always able to recover the credit 78 Energy pricing and the future of the energy market they have built up. Our second priority is to ensure that …
Government response. Ofgem has announced four Market Compliance Reviews to drive improvement across the market.
Department for Business and Trade
27
Recommendation
Third Report - Energy pricing and the f…
Accepted
Ofgem must publish a more robust impact analysis of its proposals for energy suppliers to ringfence customer credit balances. We expect the impact analysis to be based on evidence received from suppliers following an information request so that it is underpinned by facts, rather than assumptions. The analysis should include …
Government response. Ofgem already publishes data on customer debt on a quarterly basis, arising from analysis of data gathered under Social Obligations Reporting.
Department for Business and Trade
28
Recommendation
Third Report - Energy pricing and the f…
Deferred
We found consensus from across the sector that the Government should bring forward legislation to increase the frequency of the Renewables Obligation payments. We ask the Government to set out the reasons for repeated delay and failure in this area in its response to this report.
Government response. The government states this is a matter for government.
Department for Business and Trade
29
Recommendation
Third Report - Energy pricing and the f…
Not Addressed
We recommend that the Government brings forward legislation to increase the frequency of Renewables Obligation payment deadlines. The Government and Ofgem should work together to implement this change in a way that provides a suitable period of adjustment for suppliers.
Government response. The response discusses Ofgem's data collection and analysis of self-disconnection among smart-PPM customers and existing rules and guidance, but does not address bringing forward legislation to increase the frequency of Renewables Obligation payment deadlines.
Department for Business and Trade
30
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
The design of the energy price cap has contributed to recent instability in the supplier market. Ofgem failed to properly stress test its design against a range of scenarios or consider how it interacted with its other regulations. The methodology forced suppliers to subsidise customers, which was clearly not the …
Government response. Ofgem agrees with the Committee’s assessment of the benefits of Smart prepayment meters and is committed to ensuring that customers receive all the benefits of fully working and interoperable smart meters, but enforcement activity is currently focused on other areas …
Department for Business and Trade
31
Conclusion
Third Report - Energy pricing and the f…
Accepted
We welcome more frequent calculations of the price cap if this stabilises the supplier market amid current market conditions. However, Ofgem’s cost benefit analysis of its proposed move to quarterly price cap updates did not consider the impact that further price rises in January 2023 could have on vulnerable customers, …
Government response. The government states that the introduction of the Energy Price Guarantee means there is no longer a risk of prices increasing for consumers in January and Ofgem is reviewing its approach in light of the Energy Price Guarantee and will …
Department for Business and Trade
32
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
Ofgem should update the cost benefit analysis of its proposal for a quarterly price cap, so it reflects the risk of prices increasing this January, in order for Ofgem, the Government, and Parliament to fully understand the potential impacts for vulnerable customers.
Government response. Ofgem is reviewing its approach to the price cap in light of the Energy Price Guarantee and will update the Committee in due course.
Department for Business and Trade
33
Conclusion
Third Report - Energy pricing and the f…
Accepted
The Energy Bill [HL], which was introduced to Parliament on 6 July 2022, included provisions to extend the energy price beyond 2023, but it will not change how the price cap functions. Neither the Government nor Ofgem has undertaken an evaluation of Energy pricing and the future of the energy …
Government response. The government is introducing the Energy Price Guarantee to protect households from the spiralling costs of energy and will consider how price protection needs to evolve as the energy system changes.
Department for Business and Trade
34
Conclusion
Third Report - Energy pricing and the f…
We ask Ofgem to undertake an immediate review of the costs and benefits of the energy price cap to inform decisions about its operation and alternative forms of price protection.
Government response. Ofgem carries out detailed reviews of the costs and benefits to consumers for every decision made with regard to the price cap, such as those published in early August 2022. Each year Ofgem also publishes its assessment of whether conditions …
Department for Business and Trade
35
Recommendation
Third Report - Energy pricing and the f…
Accepted
We call on the Government to consider the introduction of a social tariff for the most vulnerable customers and a relative tariff for the rest of the market, to be introduced once wholesale energy prices have stabilised. We ask the Government and Ofgem to report its findings on the above …
Government response. The government states it is already protecting households through the Energy Price Guarantee and other existing policies, and will consider how price protection needs to evolve, with next steps to be set out in due course.
Department for Business and Trade
36
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
The Government’s failure to regulate third-party intermediaries in combination with Ofgem’s failure to regulate energy suppliers led to third-party intermediaries promoting energy suppliers with flawed business models and unsustainable pricing. We are concerned that third-party intermediaries did not pay sufficient regard to understanding customers’ needs and ensuring customer service standards.
Government response. The government recognizes the risks to consumers from unregulated third-party intermediaries (TPIs), and is considering responses to a call for evidence while assessing the impact of recent market events. Ofgem has implemented reforms including requiring suppliers to only work with …
Department for Business and Trade
37
Recommendation
Third Report - Energy pricing and the f…
Deferred
We recommend that the Government brings forward regulation of third-party intermediaries. Regulations should ensure that third-party intermediaries encourage customers to switch not just on price, but also on customer service standards and other factors. The regulations should also ensure that third-party intermediaries are transparent about the services offered and the …
Government response. The government is considering responses to a call for evidence on third-party intermediaries and assessing the impact of recent market events, with next steps on the future of the retail market to be set out in due course.
Department for Business and Trade
38
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
The previous Energy Retail Market Strategy was primarily driven by the objective to accelerate switching rates. The collapse of energy retailers demonstrated the flaws of this approach. The revised retail strategy will need to develop a market that differentiates not just on price, but on the services offered by suppliers. …
Government response. Ofgem is working with the Department to ensure the development of a clear and coordinated roadmap for the future energy retail market and the Department is expected to publish an update to their Energy Retail Market Strategy later this year.
Department for Business and Trade
39
Conclusion
Third Report - Energy pricing and the f…
The Department and Ofgem must urgently update the Energy Retail Market Strategy so that the supplier retail market aligns with our net zero target; this must include interim milestones and high-level principles about the role suppliers will play in achieving net zero.
Government response. Ofgem is working with the Department to ensure the development of a clear and coordinated roadmap for the future energy retail market to support the achievement of an effective transition to net zero in line with the targets set by …
Department for Business and Trade
40
Recommendation
Third Report - Energy pricing and the f…
Accepted
In order to deliver the Government’s target of a zero carbon electricity system by 2035, we further recommend that greater consideration is given to smart tariffs in the revised Energy Retail Market Strategy. Specifically, we ask the Government to consider how time of use tariffs can be supported while the …
Government response. The government indicates industry is making progress on implementation of market-wide half-hourly settlement, which Ofgem believes will be an important enabler of a more flexible, low carbon and low-cost energy system.
Department for Business and Trade
41
Recommendation
Third Report - Energy pricing and the f…
We are gravely concerned by the latest forecasts from industry experts that the price cap will increase to £3,244 in October 2022 and £3,363 in January 2023. This will have very serious consequences for households across the country, particularly those that are on low incomes, in fuel poverty, and in …
Government response. The government has set out decisive action to support people and businesses with their energy bills and tackle the root causes of the issues in the UK energy market through increased supply – ensuring the country is not left in …
Department for Business and Trade
42
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
We note some delivery risks in ensuring the Energy Bills Support Scheme reaches vulnerable customers this winter, including certain types of tenants, customers using legacy prepayment meters, and those who are in debt to their energy provider.
Government response. Ofgem continues to work with suppliers and the Department to prepare for the implementation of an increased Energy Bill Support Scheme and the Energy Price Guarantee, providing support in informing scheme design and guidance, enacting Licence Condition changes and monitoring …
Department for Business and Trade
43
Recommendation
Third Report - Energy pricing and the f…
Acknowledged
We recommend that the Government ensures there are sufficient safeguards in place for tenants to benefit from the Energy Bills Support Scheme. We recommend that the Government pays the scheme via a negative standing charge to mitigate the risk of prepayment customers not redeeming their vouchers and to ensure it …
Government response. Ofgem continues to work with suppliers and the Department to prepare for both the implementation of an increased Energy Bill Support Scheme and the Energy Price Guarantee, providing support in scheme design, guidance, and monitoring supplier compliance.
Department for Business and Trade
44
Recommendation
Third Report - Energy pricing and the f…
Acknowledged
While the Government committed to publishing a Fairness and Affordability call for evidence over a year ago, this is yet to materialise. This is a vital piece of work which will need to address how to allocate energy policy costs in a way that incentivises cost-effective decarbonisation while avoiding harmful …
Government response. Ofgem will share all available information on distributional effects of different policies with the Department and the Committee and intends to refresh the data used for distributional analysis, sharing updated assessments when available.
Department for Business and Trade
45
Recommendation
Third Report - Energy pricing and the f…
Acknowledged
We recommend that the Government urgently publishes its overdue Fairness and Affordability call for evidence, particularly in the context of rising energy prices. We recommend that the review includes a distributional analysis of the impact that recovering policy costs from electricity and gas bills has on vulnerable customers and considers …
Government response. Ofgem will share all available information on distributional effects of different policies with the Department and the Committee and intends to refresh the data used for distributional analysis.
Department for Business and Trade
46
Recommendation
Third Report - Energy pricing and the f…
Accepted
Ofgem should require energy suppliers to take a pro-consumer approach to payments and debt collections. We urge Ofgem to take swift and firm action in response to suppliers breaching the Ability To Pay licence conditions and ensure that suppliers promote a range of debt repayment options.
Government response. Ofgem has announced four Market Compliance Reviews to drive improvement across the market, including one focused on how suppliers support customers in debt or payment difficulty and is taking enforcement action where necessary.
Department for Business and Trade
47
Conclusion
Third Report - Energy pricing and the f…
Accepted
Energy prices are expected to increase to unprecedented levels and the Government’s May 2022 support package will no longer offset the significant increases for households. A considerable number of households will struggle to pay their energy bills and will be at risk of accruing large sums of debt to their …
Government response. The government outlined actions to support people and businesses with their energy bills and tackle the root causes of the issues in the UK energy market, including the 'Energy Price Guarantee' and targeted support for vulnerable households.
Department for Business and Trade
48
Recommendation
Third Report - Energy pricing and the f…
Accepted
We recommend that the Government develops a scheme to help vulnerable customers accelerate the repayment of debt that has accrued as a result of the energy pricing crisis, for example, by matching the contribution made by customers through the Fuel Direct scheme. We also recommend that Ofgem publishes data on …
Government response. Ofgem publishes data on customer debt on a quarterly basis, arising from analysis of data gathered under Social Obligations Reporting, and intends to publish updated analysis quarterly thereafter.
Department for Business and Trade
49
Recommendation
Third Report - Energy pricing and the f…
Deferred
It is unacceptable that prepayment customers, who are often moved to a prepayment meter because they cannot afford their energy bill, pay more for their energy than direct debit customers. We recommend that Ofgem addresses this differential, for example by reinstating the Safeguard Tariff for prepayment customers, to ensure that …
Government response. The government states that this is a matter for Government, not Ofgem.
Department for Business and Trade
50
Conclusion
Third Report - Energy pricing and the f…
Accepted
We are concerned by reports that self-disconnection is already at a record high, and this is before the expected, unprecedented rise to the energy price cap this winter. Ofgem only collects partial data on self-disconnection and does not have a sufficient understanding of the risks facing prepayment customers come October.
Government response. Ofgem introduced a quarterly request for information to gather data from larger domestic suppliers on self-disconnection and Ofgem's view is that it would be preferable to have longer-term data available before making it publicly available.
Department for Business and Trade
51
Recommendation
Third Report - Energy pricing and the f…
Acknowledged
We recommend that Ofgem urgently improves its data collection on self-disconnection and publishes this on a more frequent basis. We ask Ofgem to conduct an impact analysis on how expected increases to the price cap this winter will affect customers at risk of self-disconnection. We call on Ofgem to review …
Government response. Ofgem introduced a quarterly request for information on prepayment meter customers, including self-disconnection, in Q4 2021 but is waiting to have at least one year of data before making it publicly available, possibly in early 2023; they also state the …
Department for Business and Trade
52
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
Replacing legacy prepayment meters with smart prepayment meters is crucial to protecting vulnerable customers in the coming months because they allow suppliers to identify customers who are at risk of self-disconnection and provide immediate support. Yet we are hearing reports that once again Ofgem is not enforcing its rules which …
Government response. Ofgem agrees with the committee's assessment of the benefits of smart prepayment meters and is committed to ensuring customers receive those benefits, but enforcement activity is currently focused on other areas due to resource constraints and traditional meter installations are …
Department for Business and Trade
53
Recommendation
Third Report - Energy pricing and the f…
Acknowledged
We call on Ofgem to enforce its New and Replacement Obligation in the supplier licence. We recommend that the Government makes it mandatory for all prepayment households to have a smart meter installed urgently, irrespective of supplier, so that 82 Energy pricing and the future of the energy market it …
Government response. Ofgem agrees with the benefits of smart prepayment meters but is focused on other areas due to resource constraints; they expect new non-smart meter installations to decline as customers become more aware of the benefits and stocks of traditional equipment …
Department for Business and Trade
54
Conclusion
Third Report - Energy pricing and the f…
Energy efficiency is the quickest and most cost-effective way to reduce gas demand and lower household energy bills. The absence of a home insulation programme is an unacceptable gap in policy that must be urgently rectified. Since wholesale prices rose following July 2021, tens of thousands of homes could have …
Government response. Energy efficiency is a key priority for the Government as the cheapest way to bring down bills for households over the long-term. On 8 September, the government announced a new Energy Price Guarantee, which will mean a typical UK household …
Department for Business and Trade
55
Recommendation
Third Report - Energy pricing and the f…
Accepted
We reiterate our previous views that the Government should implement urgent, far- reaching, and long-term measures to replace the Green Homes Grant scheme that provides the energy efficiency supply chain with confidence of enduring demand and ends the stop-start policy approach in this area once and for all. We urge …
Government response. The government has committed £6.6bn this Parliament to improve homes to EPC band C by 2030, is consulting on raising Minimum Energy Efficiency Standards for privately rented homes to EPC band C by 2028, and is considering options to deliver …
Department for Business and Trade
56
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
A systemic failure in regulation left the energy supply market, and ultimately taxpayers, more exposed when the global wholesale energy crisis began. Some energy supplier businesses were allowed to behave in an entirely unacceptable way, without any consequence for their actions. The Government prioritised competition over effective market supervision, failing …
Government response. BEIS maintains a regular dialogue with Ofgem to review lessons learned and understand where policies can be enhanced to improve outcomes, and will work with Ofgem and relevant bodies to understand if there are any gaps within the current regime …
Department for Business and Trade
57
Conclusion
Third Report - Energy pricing and the f…
Acknowledged
The energy price crisis is putting continued strain on the remaining suppliers in the market. At the same time, Ofgem is proceeding with a programme of major regulatory reform with the objective to reverse its previous litany of shortcomings and shore up the financial resilience of the market. However, if …
Government response. The government acknowledges Ofgem's efforts to improve the robustness of the energy supply market, including an independent review into supplier failures and a new Review of UK Energy Regulation, and details its own oversight of Ofgem.
Department for Business and Trade
58
Conclusion
Third Report - Energy pricing and the f…
Accepted
The impact of the energy price crisis on households is ongoing and severe, particularly in the context of other considerable inflationary pressures, and is likely to cause an unacceptable rise in fuel poverty and hardship this winter. With wholesale Energy pricing and the future of the energy market 83 prices …
Government response. The government states it has already set out decisive action including the Energy Price Guarantee and other targeted support to address the energy price crisis.
Department for Business and Trade
59
Recommendation
Third Report - Energy pricing and the f…
Accepted
With the worst yet to come, the consequences of the energy price crisis and wider cost-of-living crisis on customers, and energy suppliers, is still to be seen. The extent of these challenges cannot be dealt with by BEIS or Ofgem alone. The Prime Minister himself stated the Government’s response to …
Government response. The government has taken decisive action to support people and businesses, including the Energy Price Guarantee limiting typical household bills to £2,500 a year for two years, the Energy Bill Relief Scheme providing a discount on wholesale prices for non-domestic …
Department for Business and Trade