Ofgem rules out any excuses for price increase by UK energy suppliers
One of the worst hit sectors due to Brexit is the energy market which showed signs of distress as smaller suppliers collapsed and larger companies wanting to increase energy prices at the drop of a hat. Due to the ever increasing demand of energy as well as imbalance in the energy market due to hike in wholesale energy prices, the scenario of UK home energy prices seem quite challenging and uncertain.
However, energy regulator Ofgem thinks otherwise and has made an announcement which would bring the energy suppliers on their toes.
In a remarkable declaration, the energy regulator Ofgem announced that UK energy suppliers have no reason or excuse to increase the energy prices. It considered the reason of increasing in wholesale prices as an excuse but said that the energy suppliers should protect themselves by changing the methods of procuring gas and electricity.
This was declared in the wake of generation of new data which suggests that the supplier’s costs are quite high in the beginning of 2017 when compared to that in the previous year. Derman Nolan, chief executive of Ofgem spoke on the topic by saying that “It’s not obvious that there should be significant price increases across the market.” The statement was given when Ofgem declared the cost pressures which energy companies can face in this year.
Ofgem released the Supplier Index Cost, which combines and studies the government policies and their consequences on the wholesale prices and network charges. According to this index, the energy prices are 15% more than they used to be last year. Ofgem spokesperson pointed out that as the energy suppliers buy energy 18 months prior to the actual time of supply, they cannot get affected by the current rise in wholesale energy prices.
Mr. Nolan emphasized on Ofgem’s unwillingness for energy price rise by saying that “We don’t see an obvious reason for price increases.” It is discovered that most of the suppliers have increased their fixed tariff costs but have not yet increased the standard variable tariff and the energy regulator does not see any reason for doing so. It also warned the suppliers that they should take measures to protect the customers from inflating energy prices by cutting down their internal costs.
Ofgem gave a general warning to the suppliers by suggesting that if they do not keep the prices low then they would face customers switching to their rival companies. As a proof of this, it said that between June 2015 and June 2016, around a million customers left large suppliers for cheaper deals provided by the smaller energy suppliers.
Brijesh is a financial advisor at Freepricecompare.com and a passionate blogger. He writes on personal finance and money-saving tips. He suggests all UK households to compare energy prices before renewal energy contract with existing supplier. When he isn’t writing, he is spending time to find advance technique of farming and its way of applying. He also plays his guitar gifted by his father.