Utility Week

20 | SEPTEMBER 2021 | UTILITY WEEK Customers Talking Points… "The ground was laid for a rise in the energy price cap." Comment Adam John Senior reporter T here is a ne art to break- ing bad news and it is something that we have seen a lot of during the past 15 months or so, with the govern- ment warning of major changes to Covid restrictions days and weeks before any o• cial announcements are made. Such early warnings tend to ultimately so• en the blow when the news becomes o• cial. A similar tactic was seen in the energy sector recently in regard to the default tari• and prepayment price caps, with Ofgem taking a leaf out of the government's playbook. News of the biggest increase yet to the cap was no shock whatsoever to the sector when it was nally unveiled last week because we had already been told about it a full 10 days previously. In the week before the o• cial announcement, the regula- tor's chief executive, Jonathan Brearley, wrote a lengthy blog pre-warning customers about the likely increases to the cap thanks to a huge spike in global wholesale gas costs. "Regrettably, the increase in wholesale costs will feed through to this price cap and, although nal analysis is not complete and other costs will also determine the overall level, it could add around £150 per household to the next level of the price cap," he said. Brearley's prediction was a conservative estimate for the default cap, which rose instead by the slightly smaller amount of £139, while the prepayment meter cap increased by £153 to £1,1309. It was not just the regula- tor issuing warnings. Around a month before the o• cial announcement, industry ana- lysts at Cornwall Insight were predicting an increase to around £1,250 per year for a typical dual fuel customer – a gure just short of the nal £1,277 con rmed by Ofgem. Yet the move by Ofgem made it clear the regulator wanted to set the narrative and get ahead of the news coverage. The intervention was likely born out of the need to re ght the almost certain negative press, with millions of consumers already having faced severe nancial hardship throughout the pandemic. Of course, a rise in wholesale costs leaves the regulator with little choice but to introduce a rise. Yet a signi cant increase to the cap will only rub salt into the wounds of many. Whether Brearley's pre-emp- tive blog had any meaningful e• ect is di• cult to gauge. Imme- diately a• er the announcement there was a strong backlash from consumer groups. Regardless of Ofgem's e• orts to control the narrative, the actual increase to the cap is yet to hit and when it does later this year, the regulator is likely to face even more criticism. "In terms of the price cap, I think the government has got it about right. We want to continue the cap, we understand that despite the fact we are increasing the price cap today we do know that it is taking away some of the profi ts that we saw in the market previously, but we should keep checking." Jonathan Brearley, chief executive, Ofgem "The board fi rmly rejects this highly opportunistic and hostile off er and does not agree that the takeover of Good Energy by a loss-making competitor would help the company compete more eff ectively in the energy market." Will Whitehorn, chair, Good Energy "A social tariff should be one of the top priorities for a 2022 Energy Bill. It would signal the government's intent to deliver a fair and just energy transition to net zero, ensuring no one is left behind." Michael Lewis, chief executive, Eon UK Quote, unquote The news in numbers: 6.7 million Number of smart meters installed between April 2020 and March 2021, doubling the total number of devices installed to 13.5 million, according to the Data Com- munications Com- pany's most recent annual report. 292 The number of new rapid electric vehicle charge- points installed in second quarter of 2021, the lowest three-monthly † g- ure recorded since April to June 2020 when the UK was in its † rst coronavirus lockdown. 453,000 Number of switches of sup- plier in July, 16 per cent below same period last year and the lowest monthly since 2018.

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