Ofgem director Christine Farnish resigns over how regulator calculates energy price cap | Political news

An Ofgem director has resigned following the electricity and gas regulator’s decision to change the way it calculates the energy price cap, which she says will lead to much higher bills.

The regulator has confirmed to Sky News that Christine Farnish has resigned from the board after disagreeing with the rest of its members over how much time energy suppliers should have to recover from current high energy prices.

She wanted suppliers to claw back those prices, which are a condition of the price cap, over 12 months to spread the cost to customers.

However, the rest of the board, Ofgem said, wanted it to take place over six months, as they said it would reduce the “very real risk of supplier failure”.

Ms Farnish, who has served as a non-executive director since 2016, told The Times she quit because she did not believe Ofgem had “stripped the right balance between the interests of consumers and the interests of providers”.

This month, Ofgem announced it was changing the cap methodology to allow suppliers to recoup wholesale energy hedging costs sooner.

Ms Farnish said she believed the move would ‘add several hundred pounds to everyone’s bill to support a number of suppliers over the coming months’.

Analysts at Investec estimated the change in method would add more than £400 to the price cap level in January, taking it to £4,200 per year from £1,971 currently.

Ofgem said: “We are grateful to Christine for her many years of dedicated service to Ofgem.

“Due to this unprecedented energy crisis, Ofgem has to make incredibly difficult decisions where carefully balanced trade-offs are constantly weighed. But we always prioritize consumer needs both short and long term.

“The rest of the board decided that a shorter payback period for energy costs was in the best long-term interest of consumers by reducing the very real risk of supplier bankruptcy, which would further increase costs on utilities. bills and would add unnecessary worry and worry at an already very difficult time.”

The cost of living crisis has dominated the Tory leadership campaign as households feel the pressure, but Boris Johnson, Rishi Sunak and Liz Truss have so far ignored calls to sit down and to find a solution to help people before a new Prime Minister is chosen. September 5.

Ed Miliband, Labour’s climate change and net zero secretary, accused the government of being ‘asleep at the wheel’ following Ms Farnish’s resignation.

“This is further proof that the government is asleep at the wheel when it comes to the energy bill crisis,” he said.

“For 12 years, the Conservatives have totally failed to regulate the energy market. In no other country have 32 energy suppliers gone bankrupt.

“We simply cannot allow the British people to suffer another rise in bills. It is intolerable that the Tories continue to offer no solution to this crisis and oppose the Labor plan.

‘Labour’s fully funded plan would solve the problems immediately and for the future. It would mean people wouldn’t pay a penny more on their energy bills this winter, saving the typical household £1,000 Only Labor can give Britain the fresh start it needs.”

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