The CEO of Ofgem says the market price of energy is higher than at the time of the last price cap estimate – a warning that the October price cap figure could be higher than previously forecast.
In May, the energy regulator predicted price cap would reach £2,800 when it is next reviewed in October.
But Jonathan Brearley told the public accounts committee on Monday: “It is clear given the price dynamics we are seeing, given the ongoing impact of the Russian invasion of Ukraine, that there is positive price pressure there – as prices look higher than they are. did when we made that estimate.
“But we won’t be making any ongoing kind of comment until we’ve made our formal announcement.”
The energy price ceiling is based on the wholesale price of gas and electricity.
It is recalculated twice a year, although this may change to every three months.
The price cap rose 54% in April to reach £1,791, and although Mr Brearley did not provide MPs with a new forecast, experts at Cornwall Insight said last week predicted the cap could reach £3,244 a year from October†
Mr Brearley also said there should have been stricter controls on energy companies entering the market, with more than four million customers affected by 28 supplier outages since August last year.
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He told the public accounts committee: “The problem was the ongoing requirements for the suppliers themselves and we accept, in hindsight, that they should have been stricter.
“When we looked at supplier failures prior to September of this year, there were costs, but they weren’t close to the magnitude of what we’ve seen.
“But the fact is what we had was this massive surge in wholesale prices, which did two things: it increased the number of suppliers that failed, but also increased the cost of their failure.
“Now, you know, we accept that looking back, financial resilience controls could have been and should have been stronger, and similarly, the price cap design should have allowed the market to adapt more freely.”
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There are currently 26 domestic suppliers and Mr Brearley said he could not rule out more failures.
“We’re not done yet, so this isn’t kind of a throwback to last winter, we’re still in this change and we’ve got all our enforcement types and procedures ready and in place.
“But it’s still a challenging market, so it’s quite possible we’ll see further exits.”