Europe

‘400 pounds per customer’ Dale Vince warns Ofgem price cap ‘fundamental problem’

Ofgem price cap ‘fundamental problem’ says Ecotricity founder

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Founder of Ecotricity Dale Vince has warned that the gap between Ofgem’s price cap and the wholesale market price is probably “approaching £400 per customer”, branding the cap a “fundamental problem”. It came after two more energy firms collapsed under soaring gas prices, affecting millions of customers. Speaking to BBC Newsnight’s Emily Maitlis, Mr Vince said: “The cap is one of the fundamental problems today.

 

“It’s s not the only problem. It is a confluence of things.

“A lot of these new entrants in the market in the last couple of years have not hedged their power.

“They haven’t bought it forwards and so they’ve been caught out by the sudden spike.

“It’s a gamble that they’ve taken and it’s not paid off.”

He went on: “But at the same time, normally a business where its input cost goes up, it puts up its retail price to keep yourself whole.

“These companies are prevented from doing so by the Government’s price cap.

“It’ is a very unrealistic measure and it’s going to force dozens of companies out. 

Ms Maitlis then asked: “The government asks a bigger company to take on the customers of a smaller collapse company.

“Can they do that?”

The founder replied: “Yeah, they can but they’re gonna have to be paid to do it. I’m certain of it.

“The gap between the price cap on the wholesale market price today is probably approaching 400 pounds per customer.

“So no energy company is going to take that on for themselves.

“We’re talking one and a half million customers in the last week or so that now don’t have an energy supplier, that is 600 million quid. That’s not going to happen.

He went on: “Government is gonna have to pay that and you’ve got to ask yourself if the Government are willing to pay the big suppliers to take on these customers and keep the price rise from those customers.

“Why aren’t they willing to help by the small suppliers to do the same?”

The energy price cap, set by industry regulator Ofgem, helps to control the cost of gas and electricity in the UK.

In 2021, the cap level has risen twice in the same year for the first time and is now at its highest point ever.

Escalating gas prices in the UK have caused a crisis threatening a wide range of industries, small energy firms, and households.

Source: Read Full Article