Suppliers have urged the government to give them the right to appeal to the Competition and Markets Authority against the level of price cap set by Ofgem, if it becomes law.
In their submissions to the pre-legislative inquiry into the draft price cap legislation being carried out by the BEIS (business, energy and industrial strategy) select committee, a number of utilities have said that an appeal mechanism is a pre-requisite for continued investor confidence in the sector.
Their submissions, which have been published today (Monday) to tie in with tomorrow’s first hearing of the select committee inquiry, include calls for suppliers to be given a wider range of options than the courts to appeal against any cap set by Ofgem.
The utilities have said that they should have the option of appealing to the CMA if they disagree with the level of the cap.
In its submission, Eon said: “Investors need the confidence that any cap will be set in a robust way which stands up to independent scrutiny, and therefore we believe that the basis of an appeal should be widened to allow for this.”
EDF have said that denying a route of appeal to the CMA is ‘inconsistent with UK regulatory practice’.
“The CMA is the right body to make complex economic judgements, particularly with regard to how the authority has sought to balance the competition objectives that would be imposed on it by the bill.”
Centrica said an appeal route to the CMA as an “essential” to “provide investors with the confidence to invest”.
However Eon called for the government not to legislate the cap, which it said will “retard the transformation of the UK energy industry and have a long-term negative, impact on customers and competition.”
The German owned company has said that if a cap is introduced, it should be limited to two years, as recommended by Professor Martin Cave in his minority report for the CMA’s energy prices inquiry in 2016.
Centrica sad in its submission that price controls are “likely to damage” progress made on increasing switching and customer engagement.
However, former shadow energy secretary Caroline Flint called in her submission on the government to give Ofgem greater powers to cap prices and urged generation and supply to be split up.
And Citizens Advice has called for the removal of the requirement that the cap should lapse in 2023, regardless of whether or not it is still needed.
“The cap’s removal should be driven by evidence, not by the calendar date,” it said. CMA