Ofgem boss expects ‘significant’ price cap rise in April

Speaking on the BBC’s Today programme, Jonathan Brearley - chief executive of the regulator - also said it needed to “look across the regulatory framework” to make sure the system is robust enough to manage something like this in the future.

The comments come during the current crisis in the energy market, which has seen nine energy providers cease trading. According to The Guardian, another provider - Omni Energy - has informed its customers that it expects to bust, unless the gas price crisis eases before the winter.

In an email to about 10,000 customers, the provider said: “The cost of wholesale energy is continuing to rise and without significant change in the wholesale cost of energy, or a government intervention, it is highly likely Omni Energy will cease trading before the end of November.” The company also told customers it would switch them to a new supplier unless they objected.

This week also saw energy market analysis company Cornwall Insight publish modelling which predicts that the energy price cap would increase by approximately 30% in the summer of 2022 to £1,660. Its forecasting also suggests that prices could go up to £1,663 by the winter of 2022.

While Brearley did not mention exact figures, he did say that “legitimate costs” will have to be passed on to the consumer. He added: “Looking at costs that are in the system, we are expecting a significant rise in April.”

The current disruption has led to calls from the industry for extra support. Earlier this week, the trade body Energy Intensive Users’ Group said the government and Ofgem must “match the urgency” shown in other countries by implementing measures to protect the UK’s energy-intensive industries.

In addition to this, debt collection and purchase industry trade body the Credit Services Association (CSA) has written to Ofgem to seek clarification around the standards customers should expect regarding the practices of administrators and accounts in arrears.

In a letter to Brearley, the CSA’s chief executive Chris Leslie wrote that - while it’s clear what will happen to those customers with neutral and/or credit balance - the picture appears less clear in relation to those that are in arrears.

He added: “We believe it would be beneficial at this early stage to have greater clarity on the nature of the regulatory framework in which administrators will determine their approach to accounts in arrears.”

The management and transfer of customer data is also a key concern of the CSA. Leslie explained: “The accuracy and completeness of data will be a key consideration, especially for those whose debts remain with those administering the failed supplier.

“In those cases, not only will it be crucial that the administrator adheres to the same standards as you would expect from a supplier, but also the new supplier will need to be aware of the existence of the debt, even if it is not responsible for its recovery.

“It will be appreciated that our members will not be able to pre-empt the potential effects of inaccurate data any more than they would be able to advise on wider considerations such as entitlement to benefits or what might happen in relation to those customers on pre-payment meters.”

Speaking on the Today programme, Brearley said Ofgem was “open minded” about how to help the industry. He explained: “We are working with the secretary of state and others to make sure we can support companies through this.

“Now there’s a whole set of things that we’ve already done, so some companies are exempt from levies, companies have access to funds that the government already has in place, but we the regulator are open minded about how we can help and of course we support those discussions.”