Ofgem has released its final working papers for the proposed price cap. The fourth paper tackles environmental and social obligations costs, while the fifth seeks views and evidence on the updated competitive reference price approach to setting the initial level of the default tariff cap.
The now-completed series of five working papers follows the government’s proposed price cap legislation, which was presented to parliament in February. This would see the introduction of a temporary price cap for customers on standard variable tariffs (SVT) and default tariffs, and would create a new statutory role for Ofgem to deliver this measure. It will be Ofgem’s responsibility to design and implement the price cap.
The third paper considered price cap headroom, the second paper looked at using a “market basket” to set the initial level of the default tariff cap, which could then be updated over time, while the first looked at what the regulator described as “high level questions surrounding the cap”.
In the fourth paper, Ofgem reviews the suppliers’ social and environmental and social obligations in more detail, and provides an update on its emerging thinking on a selection of issues relating to how these costs could be treated: both when setting the initial level of the default tariff cap, and when updating it over time.
Then the fifth paper covers what the regulator describes as “the updated competitive reference price approach to setting the initial level of the cap.”
Ofgem is inviting comments on the issues raised throughout the series, which should be submitted by 3 May 2018.