An Ofgem director has resigned in protest over the regulator’s decision to allow suppliers to recover wholesale energy costs over a shorter period.
Christine Farnish, who joined Ofgem in January 2016 as a non-executive director, said in an interview with The Times that she believed the move “would add several hundred pounds to everyone’s bill in order to support a number of suppliers in the coming months” and that she did not believe Ofgem had “struck the right balance between the interests of consumers and the interests of suppliers”.
“I resigned from the Ofgem board because I could not support a key decision to recover additional supplier costs from consumer bills this winter,” she added.
Ofgem revealed earlier this month that it was allowing suppliers to recover exceptional backwardation costs over a period of six months, rather than 12 months as originally proposed.
Following this Investec analyst Martin Young calculated that overall backwardation costs will be around £296 per dual fuel customer over the coming winter, adding that Ofgem’s decision will have “a material impact” on the level of the cap, particularly in January 2023.
Young subsequently revised his calculation for the price cap to more than £3,500 in October and £4,200 in January.
Confirming Farnish’s departure, an Ofgem spokesperson said the regulator was “having to make some incredibly difficult decisions where carefully balanced trade-offs are being weighed up all the time”.
“But we always prioritise consumers’ needs both in the immediate and long term,” they added.
“The rest of the board decided a shorter recovery period for energy costs was in the best interest of consumers in the long term by reducing the very real risk of suppliers going bust, which would heap yet more costs onto bills and add unnecessary worry and concern at an already very difficult time.”
Writing on Twitter in response to the news, shadow climate secretary Ed Milliband said: ”This is further proof that the government is asleep at the wheel when it comes to the energy bills crisis.
“In no other country have 32 energy suppliers gone bust. It is intolerable that the Conservatives oppose Labour’s plan to freeze energy bills this winter.”
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