Utility Week

UTILITY WEEK | SEPTEMBER 2021 | 23 Customers He says: "We welcome these proposals and believe they could generate levels of long-term competition into the energy mar- ket like we've never seen before. "Previous opt-in switching trials helped signi• cant numbers of consumers switch energy suppliers than otherwise would have. A widespread rollout will empower custom- ers to drive down the cost of their bills." However, the move to automatically switch consumers or opt-out is a radical one. One industry expert says he believes it represents a major shi- in the government's attitude. Adam Bell, head of policy at management consultancy Stonehaven and former head of energy strategy at BEIS, says: "Both the gov- ernment and the retail strategy are e… ectively saying that they don't really believe competi- tion is ever going to be adequate to support people who are disengaged from the market. That's a big step change in the government's attitude. It's almost an ideological shi- and it's really signi• cant for the sector." The price cap Also included in the BEIS retail strategy were proposals to introduce legislation to enable the price cap to be extended beyond 2023 in order to protect consumers in the interim period before the switching plans are implemented. Not long a- er the strategy was published, Ofgem chief executive Jonathan Brearley issued a blog warning of a potentially major increase to the cap in October. The blog explained that soaring wholesale costs could result in an increase of £150 per household. "Regrettably, the increase in wholesale costs will feed through to this price cap and, although the • nal analysis is not com- plete 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"writes. The following week came the news that the price caps will see their highest increases yet – £139 for the default cap and a £153 rise in the prepayment meter cap. Speaking to Utility Week a- er the announcement, Brearley said he believed the government has "got it about right" with its plans to extend the cap beyond 2023. "We want to continue the cap. We under- stand that, despite the fact we are increasing the price cap today, it is taking away some of the pro• ts we saw in the market previously. But we should keep checking that," he said. The increases were met with major con- cerns from some in the sector. Peter Smith, director of policy and advo- cacy at fuel poverty charity National Energy Action (NEA), says: "This is a devastating "The energy retail sector has changed beyond all recognition in recent years … and yet this strategy, which should be looking to the future, is stuck in the past." Emma Pinchbeck, chief executive, Energy UK "Ofgem really has had little choice but to increase the level of the energy price cap." Karin Sode, joint-chief executive, People's Energy "Without the price cap energy prices would be hundreds of pounds higher than they are now. Never has the cap been more vital and it should be made permanent." Greg Jackson, chief executive, Octopus Energy "This is a devastating increase. Millions of household budgets are already stretched to the limit and this massive rise could not be coming at a worsetime." Peter Smith, director of policy and advocacy, NEA "This is a devastating increase. Millions of household budgets are already stretched to the limit and this massive rise could not be coming at a worsetime." , director of policy and advocacy, NEA "Without the price cap energy prices would be hundreds of pounds higher than they are now. Never has the cap been more vital and it should be made permanent." , chief executive, Octopus Energy "The energy retail sector has changed beyond all recognition in recent years … and yet this strategy, which should be looking to the future, is stuck in the past." "Ofgem really has had little choice but to increase the level of the energy price cap." , joint-chief executive, People's Energy increase. Millions of household budgets are already stretched to the limit and this massive increase could not be coming at a worse"time. "As well as a signi• cant rise in general inš ation – driving up spending on other essentials such as food – the new cap level takes e… ect in October when millions of peo- ple will see a reduction in their incomes as furlough winds down and the upli- s to Uni- versal Credit are likely to be withdrawn. "This toxic combination of higher prices, reduced incomes and leaky, inež cient hous- ing, will lead to a further surge in utility debt and badly damage physical and mental health this winter." Others are more sympathetic towards Ofgem. Karin Sode, joint-chief executive of Peo- ple's Energy, recognises that the timing of the increase will be troubling for many, but says: "Ofgem really has had little choice but to increase the level of the energy price cap." Meanwhile, Greg Jackson, founder and chief executive of Octopus Energy, says: "Global gas prices have tripled in the last year, so without the price cap energy prices would be hundreds of pounds higher than they are now. Never has the cap been more vital and it should be made permanent." Adam John, senior reporter

• Cover