The government has “got it right” with its plans to table legislation to extend the default tariff cap beyond 2023, Ofgem’s chief executive has said.
Jonathan Brearley was speaking on a media conference call with journalists this morning (6 August) following the regulator’s announcement it was increasing the cap to its highest level yet.
From 1 October, customers on default tariffs paying by direct debit will see an increase of £139 – from £1,138 to £1277. pre-payment meter customers will see an increase of £153 – from £1,156 to £1309.
Brearley stopped short of saying whether the price cap should be made permanent when asked by Utility Week, but did say he endorsed the approach set out in the retail strategy.
“In terms of the price cap, I think the government has got it about right. We want to continue the cap, we understand that despite the fact we are increasing the price cap today we do know that it is taking away some of the profits that we saw in the market previously, but we should keep checking that.
“We know the retail market is going to change, we know as we move towards net zero we are likely to need a different kind of way of buying and selling energy therefore it is absolutely sensible to keep it under review.”
Additionally, Utility Week asked Brearley about his thoughts on proposals made by several leading industry voices recently about whether social tariffs would be a better alternative to the cap.
He added: “We welcome ideas around how we are going to tackle fuel poverty and how we are going to address the genuine needs of some of the most vulnerable in our society, but the point is a social tariff requires legislation and we need to act today.
“That’s why we are asking industry, government, Ofgem and indeed those NGOs involved to work together to support people through what is ultimately a very difficult change.”