What does Ovo's potential takeover of SSE mean for the big six and does it signal a new era of consolidation in the energy retail market? Adam John talks to experts including former Npower boss, Paul Massara.
Following Ofgem’s minded-to decision to introduce a quarterly price cap, Utility Week reporter Adam John believes it is time to start looking to a future that is not fixated on price and switching. From a relative cap to social tariffs, there are several options on the table to be considered. Failure to act is likely to result in more consumer woe.
A windfall tax on energy company profits is not “off the table”, Rishi Sunak has stated. The chancellor of the exchequer has come under pressure from Ed Miliband to adopt Labour’s proposed windfall tax on oil and gas companies.
Kraken Technologies, the provider of Octopus Energy’s proprietary end-to-end energy services platform, has announced it is expanding into other utility sectors such as water and broadband. As part of the expansion, the company has formed a new business, Kraken Utilities, which is hiring for another 50 positions to add to its existing team of 250 people.
April saw a record low in the number of energy supplier switches started, the latest figures from Electralink have revealed. The company said with contracts ending each Spring April typically shows relatively high numbers of switches started as customers seek cheaper deals. Yet with a record increase to the price cap, Electralink said the appetite to change supplier has “flatlined”.
Ofgem’s minded-to decision to introduce a quarterly price cap period from October has raised concerns that vulnerable customers could face large price hikes during the coldest months of the year. Peter Smith, director of policy and advocacy at the charity National Energy Action (NEA), said the move “opens the door to significant price rises” over the coming winter.
Ofgem has altered the parameters for its Market Stabilisation Charge – a temporary measure introduced in April to limit suppliers’ hedging losses if wholesale prices fall substantially – to make it stronger and more easily triggered. The regulator said the adjustments will make the charge “more robust” in the face of increased hedging risks following Russia’s invasion of Ukraine.
Ofgem is pressing ahead with proposals to shorten the price cap period from six months to three to reduce the time lag between changes in wholesale energy prices and their reflection in the cap. The regulator said its minded-to decision, which is subject to consultation, would allow suppliers to more accurately predict how much energy they need to purchase, reducing the risk of further failures.
The gas crisis that began in autumn last year and deepened with Russia’s recent invasion of Ukraine has “fundamentally changed” the economics of energy, according to Ofgem chief executive Jonathan Brearley. Speaking at a conference on Wednesday (11 May), Brearley said the massive increase in gas prices since then has brought an end to the old idea of an energy trilemma, whereby the objectives of decarbonisation, affordability and security of supply are in tension with each other.
The price cap on default tariffs is expected to remain above £2,200 for at least the next three periods up to and including the winter of 2023/24, according to Cornwall Insight. The consultancy predicted that the cap would rise to £2,595 for the next period beginning in October, split between £1,086 for electricity and £1,509 for gas.
Ofgem has been accused of being reactive in its approach to assessing financial resilience in the energy retail sector, as well as slow to design new policies to address risk, in a new report. The 111-page document, written by finance consultancy Oxera, made a series of recommendations to strengthen Ofgem's regulatory regime following dozens of supplier failures over the last year.
More than 20 million smart meters have been connected to Britain’s national network, the Data Communications Company (DCC) has revealed. The DCC said the Midlands has been the fastest region to take up the technology with North Kesteven in Lincolnshire becoming the first area to reach a more than 60% take-up of smart meters.
Energy retailers have been given three weeks to provide Ofgem with information relating to their direct debit activities, the business and energy secretary Kwasi Kwarteng has confirmed. It comes after the regulator’s chief executive Jonathan Brearley expressed concerns that some suppliers may have been increasing direct debit payments by more than is necessary or directing customers to tariffs that may not be in their best interest.