Orkney and Shetland MP, Alistair Carmichael, has today raised concerns about Ofgem’s proposed changes to the management of the energy price cap, following significant criticism of the plans by consumer advocate Martin Lewis. Mr Carmichael warned that the regulator must remember that its role should be to “put customers first, not the major energy suppliers”.
On Monday, Ofgem unveiled proposals to review the energy price cap every three months rather than the current six. However, the first price cap period under the new regime would be calculated using the past six months of wholesale gas and electricity prices, which have seen record highs.
The planned changes have been strongly criticised by consumer advocate Martin Lewis, who voiced frustration with measures which he said were aimed at stabilising prices on behalf of energy companies without reducing standing charges for consumers. Mr Lewis suggested that Ofgem had “kowtowed” to industry rather than helping families.
The energy price cap jumped 54 per cent in April, taking the bill for an average household to £1,971, with a further sharp rise expected in October. Energy prices have been the key driver of inflation which is forecast to spike to 10 per cent this winter, tightening the squeeze on families’ budgets.
Mr Carmichael said:
“Ofgem has to remember that it is supposed to put customers first, not the major energy suppliers, many of whom have posted sky-high profits in recent months while the rest of the country is facing sky-high prices. You get the sense that they spend a little too much time worrying about how those at the top of the industry feel rather than everyday families.
“When someone as practical and serious as Martin Lewis is at the end of his tether with Ofgem you know that something has gone badly wrong. If he is right that Ofgem is actually trying to reduce competition on price in order to protect the big energy companies then it is a completely backwards way to approach energy supply, particularly when it is families and small businesses who are currently taking the biggest hit. There has to be more that the regulator can do to help struggling people, rather than simply acting as a protector of the status quo for suppliers.”