Yahoo Finance Ofgem director quits regulator over energy price cap
A director of Ofgem has accused the energy regulator of damaging households by allowing a huge increase in the price cap and quit her job.
Christine Farnish resigned from the watchdog after it allowed suppliers to pile additional costs onto customers this winter, contributing to an expected surge in the cap on gas and electricity bills from £1,971 to £3,523 in October.
Ms Farnish said that Ofgem had not had not in her view “struck the right balance between the interest of consumers and the interests of suppliers”.
She added that the regulator had an “overarching legal duty to protect the interests of consumers”, telling the Times: “I resigned from the Ofgem board because I could not support a key decision to recover additional supplier costs from consumer bills this winter.”
Her concerns stemmed from a decision to allow suppliers to recoup certain energy costs during this winter rather than spreading them out over the year.
The move will help energy companies shore up their finances but analysts have calculated it could add more than £350 to bills between October and March, deepening the cost-of-living crisis.
The resignation comes at a sensitive time for the regulator as it tries to grapple with the fallout of an unprecedented surge in gas prices triggered by Russia’s war on Ukraine.
Ofgem has been heavily criticised for a historically relaxed approach to regulation in which it allowed dozens of inexperienced, underfunded suppliers rush into the market in recent years under efforts to encourage competition, only to collapse when gas prices started surging last August.
It is trying to avoid a repeat of those collapses with the changes to the way the price cap on energy bills is calculated, which include allowing suppliers to recoup costs sooner for buying energy in advance.
On Wednesday night, a spokesman thanked Ms Farnish for her service, adding: “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.”
“Due to this unprecedented energy crisis, Ofgem is 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.”
