Ofgem chief executive Johnathan Brearley has joined in growing calls on the government to rethink Britain’s energy price cap, after his regulatory body oversaw huge profits for suppliers this year.
Though Ofgem’s own pricing of the energy price cap allowed British Gas and Eon – the UK’s largest energy suppliers – to rake in profits by raising bills, Brearley hinted a change could be due to The Guardian.
“I think we are clear that a more rigorous framework of providing support for customers is needed,” he said.
“In this volatile market, the price cap has costs as well as benefits, so we would welcome a debate on the future of pricing regulation.”
Both British Gas and Eon penned a jump in half-year profits thanks to clauses in the price cap allowing them to hike bills to recoup losses made early on during the energy crisis.
This translated to the pair reporting near-900% and 40% increases in profit respectively during the first six months of the year.
Given Ofgem’s price cap, which determines how much suppliers can charge households per unit of energy, still sits higher than pre-Ukraine war wholesale prices - despite these falling below the mark in December last year - the regulator has faced growing scrutiny.
“The truth is, in a market that was more stable, the price cap did its job,” Brearley continued.
“I think it’s clear to me that a lot of change is going to be needed to increase the pace of what we can do,” he added, suggesting this was already “well underway”.
Ofgem is due to unveil the price cap for the three months from October in the coming weeks, with July having marked the first time in 10 months where the government did not subsidise household bills.