Source · Select Committees · Business and Trade Committee
Third Report - Energy pricing and the future of the Energy Market
Business and Trade Committee
HC 236
Published 26 July 2022
Recommendations
4
Not Addressed
Para 37
We recommend that Ofgem implements the recommendations of the Oxera report in full to ensure...
Recommendation
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 …
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Government Response Summary
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
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9
Not Addressed
Para 56
We call on the administrators of Avro Energy to request that the Insolvency Service consider...
Recommendation
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 Summary
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 enforcement action taken in response to rule breaking by energy suppliers.
Department for Business and Trade
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22
Not Addressed
Para 95
We recommend that the Government implements a hedging strategy at Bulb Energy.
Recommendation
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 …
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Government Response Summary
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 Energy.
Department for Business and Trade
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25
Not Addressed
Para 105
Ofgem should publish detailed proposals that will ensure energy suppliers have a higher level of...
Recommendation
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 …
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Government Response Summary
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
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29
Not Addressed
Para 123
We recommend that the Government brings forward legislation to increase the frequency of Renewables Obligation...
Recommendation
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.
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Government Response Summary
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
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41
Para 170
We are gravely concerned by the latest forecasts from industry experts that the price cap...
Recommendation
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 …
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Department for Business and Trade
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Conclusions (6)
5
Conclusion
Not Addressed
Para 44
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 Summary
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.
13
Conclusion
Not Addressed
Para 64
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 Summary
The government states that this is a matter for Government.
19
Conclusion
Not Addressed
Para 85
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 Summary
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.
34
Conclusion
Para 142
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.
39
Conclusion
Para 162
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.
54
Conclusion
Para 216
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 …