Third Report - Energy pricing and the future of the Energy Market

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.

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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 … Read more 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 to the taxpayer in future, and report to this Committee within the next six months on the lessons learned and any required reforms. We suggest, as a minimum, that the Treasury guidance is amended to make it clear that energy suppliers in the Special Administration Regime are presumed to be permitted to hedge. (Paragraph 96) Reforms to the supplier market Show less

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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 … Read more 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. Show less

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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 … Read more 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 suppliers that they work with, provide an explanation of remuneration and access to advice and redress for customers. The regulations need to be future proofed for the significant role that third-party intermediaries are expected to play in the transition to net zero. Show less

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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 … Read more 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 they pay no more than direct debit customers for their energy. This would be a temporary measure while the Government consults on the operation of a social tariff. Show less

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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 …

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