Is Ofgem fit for purpose ?

dogshome

The Price Cap is a valuable asset for consumers as it protects them from rip-off prices when they are forced onto Deemed Contracts when moving home, but it was always historically more expensive than a suppliers Fixed Term contracts.

Ofgem set it twice a year - In April & October - and it worked well until  now.

The Cap they set last April was already too low to account for the cost of the raw fuels used to create Electricity, and there were many posts on this site from people querying why the SVT tariffs being offered were cheaper than fixed term contracts.

I experienced this myself in May 2021 when looking for a tariff for the widow of a friend who current fix was about to expire.

So we come to a Summer of ever increasing product costs being loaded onto suppliers who are trapped under the umbrella of an already unrealistic Price Cap, with Ofgem just sitting on it's hands whilst gazing at the view from the windows of their ivory tower in Canary Wharf

Cynics might take the view that Ofgem found monitoring 40+ supply companies was hard word, so have used the crisis to cull the number down for an easier life.

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Farway

Ofgem was set up as a sop to consumers when energy was denationalised & flogged off, it was deliberately structured to be useless and not frighten off potential energy company buyers

Whatever happens with Ofgem then & now is down to political decisions in the end, and their masters have decreed "the market" will rule and some must go to wall

The alternative would be back to nationalisation where the price of fuel is set in Downing Street without regard to true cost. The blackouts in China show where this could lead

[Deleted User]

The OP is correct in that the Cap set today looks back and not forward. The Government’s decision not to revise the Cap is just going to add additional costs to the ongoing calculation that determines the Cap in April next year. My own view is that the Cap should have been increased to reflect present market forces and to stop some of the supplier failures. If hints on Radio 4 this morning are to be believed, the Government is getting very nervous about the impact of a large supplier failing. The cost of this failure could be enormous in terms of future energy bills.

I have gently pointed out to my MP that sticking with the present Cap will mean a very large Cap increase in April; along with the change to NI and predictions of a large increase in Council Tax. Not good politically with May local elections.

jimjames

On the original question I don't think it is but it depends what the terms of reference were set as for it.

To have the situation where a supply company like Avro is able to only stay afloat due to customer credit balances and owners are still able to extract money when it's making a massive loss and consumers then pick up the tab doesn't seem to be right.

QrizB

Ofgem is a non-ministerial government department.

It does what the UK Gov't asks it to do.

It is entirely fit for that purpose. Whether it is fit for the purposes you or I would like it to fill is immaterial.

Flight3287462

The Commodities Feed: No stopping the gas rally

https://think.ing.com/snaps/the-commodities-feed-no-stopping-the-gas-rally

If it burns China is buying it  Near month Gas TTF €100, this morning an all time high, Thermal Coal was over $220,  Asia snapping up as many LNG cargoes as they can and we aren't even in winter yet.

[Deleted User]

When it took the vets 2 full days to determine the actual mechanics of the 'cap', and therefore work out an individuals likely cost...