Recommendations & Conclusions
12 items
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
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
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
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
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
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
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
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
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
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
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