An Ofgem executive has abandoned a decision by the electricity and gas regulator to change the way energy price caps are calculated, which she says will lead to much higher bills.
The regulator confirmed to Sky News that Christine Farnish has stepped down from the board after disagreements with the rest of the members over how long it takes energy suppliers to make up for today’s high energy prices. .
She wants suppliers to recoup those prices, which are a condition of the price cap, over 12 months to split the cost among customers.
However, the rest of the board, Ofgem said, wants that to happen in six months as it says it would reduce the “very real risk of suppliers going bust”.
Ms Farnish, who has not run since 2016, told The Times she resigned because she did not believe Ofgem had “stripped the right balance between the interests of consumers and the interests of suppliers”.
This month, Ofgem announced it was changing the methodology of the cap to allow suppliers to recover the cost of wholesale energy hedging earlier.
Ms Farnish said she believes the move “will add a few hundred pounds to people’s bills to support a number of suppliers in the coming months”.
Investec analysts estimate the change in methodology will add more than £400 to the price cap in January – bringing it to £4,200 a year from £1,971 currently.
Ofgem said: “We are very grateful to Christine for her dedicated service to Ofgem over the years.
“Due to this unprecedented energy crisis, Ofgem is having to make some incredibly difficult decisions where a careful balance is always weighed. But we always prioritize the needs of our consumers. both immediate and long-term.
“The rest of the board decided a shorter payback period for energy costs was in the best interest of consumers over the long term by reducing the very real risk that suppliers bankruptcy, which will add costs to the bills and add unnecessary worry and anxiety at an already very difficult time.”
The cost of living crisis has dominated the Tory leadership’s campaign as households feel the squeeze, but Boris Johnson, Rishi Sunak and Liz Truss have so far not heeded calls to sit down and come up with a solution to help people before a new prime minister is chosen. on September 5.
Ed Miliband, Labour’s climate change and net zero secretary, accused the government of “falling asleep at the wheel” after Ms Farnish resigned.
“This is further proof that the government is asleep in the cycle of the energy bill crisis,” he said.
“For 12 years, the Conservatives have completely failed to regulate the energy market. No other country has had 32 energy suppliers go bankrupt.
“We simply cannot allow the British people to suffer the rise of bills. It is unacceptable that the Conservatives continue to offer no solution to this crisis and protest. Labour’s plan.
“Labour’s fully funded plan will fix the problems immediately and for the future. It means people won’t have to pay a dime more on their energy bills this winter. , saving a typical household £1,000. Only Labor can give Britain the fresh start it needs.”