Citizens Advice response to the Ofgem review of wholesale cost allowances in the default tariff cap

Citizens Advice response to the Ofgem review of wholesale cost allowances in the default tariff cap 243 KB

This review seeks to bring in asymmetric treatment, in favour of suppliers and against consumers, regarding the energy price cap. This is in direct contradiction to the Ofgem position from a previous consultation. We believe that this is a further example of the energy price cap becoming a lobbyists’ charter.

Ofgem has made many upward adjustments to the price cap. It has previously been clear that it would be prepared to make downward adjustments to protect consumers. However, Ofgem now appears to have accepted supplier arguments against downward adjustments. It has also used a different assessment approach compared to when giving suppliers additional allowances for wholesale costs.

All this combines to provide an unbalanced energy price cap which provides far weaker protections for consumers. To address this, Ofgem should:

  • Reconsider it’s response to supplier arguments around making downward adjustment in the energy price cap

  • Ensure a consistent approach is applied to wholesale adjustments across different periods

If persisting with the position proposed in this consultation, then Ofgem should adjust supplier profit margin to reflect this rebalancing of risk away from suppliers.

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