Ofgem will be handed a mandate to prevent suppliers “gaming” the soon to be introduced cap on energy bills, Claire Perry has revealed.
Giving evidence to the House of Lords economic affairs committee yesterday afternoon (20 February), the energy and climate change minister identified gaming as one of the key risks surrounding the introduction of the cap on standard variable and other default tariffs.
“Ofgem’s mandate will be to design report mechanisms to make gaming behaviour very apparent and avoid clustering round price points,” she said.
Perry also told the committee, which was quizzing ministers on the economics of energy, that the government’s aim to introduce a price cap next winter meant “pre and not post-Christmas”.
The energy price cap legislation is currently in draft form.
Business, Energy and Industrial Strategy (BEIS) secretary of state Greg Clark said the government would “continue to look”at how bills could be broken down to show customers the proportion of their bills accounted for by government policies, such as climate change levies.
He also said it was “right” for the UK to proceed with the nuclear new build programme to maintain a diverse mix of energy supply and to guard against the risk of intermittent generation by renewable sources of power.
But Clark said the costs of the programme will be kept under “constant review”, adding that every new nuclear plant would have to go through a value for money assessment.
He also told peers the government had not taken the decision to award EDF a £92.50 guaranteed strike price for the Hinkley C plant with its “eyes closed”.
“The model was designed to ensure that risk stayed with the developer rather than the taxpayer,” Clark said.
And he agreed with a suggestion by the committee that the future system of energy generation subsidies should be “simpler” with a greater role for market mechanisms,
Jeremy Pocklington, acting director general of energy transformation at the BEIS department, denied the UK was reliant on the delivery of the Hinkley nuclear power station to keep the lights on.
“Ultimately if Hinkley is late and there is no reason it will be, there are a number of other things that can happen,” he said, adding existing plants could be kept running longer than anticipated and other stations could come on stream.