Energy pricing and the future of the Energy Market

Business and Trade Committee Closed Inquiry
Opened: 8 Dec 2021 Closed: 18 Apr 2023 Parliament page
The Business, Energy and Industrial Strategy Committee is holding an inquiry on Energy pricing and the future of the Energy Market. The Committee’s inquiry on the retail energy market follows unprecedented surges in wholesale energy prices since the summer and with a number of firms going out of business, including … Read more
32 Recommendations
27 Conclusions
1 Report
4 Oral sessions
19 Letters
4 Events
Activity timeline 29 events
31 Jan
2023
Correspondence
13 Oct
2022
Report published
21 Sep
2022
Correspondence
6 Sep
2022
Correspondence
29 Jul
2022
Correspondence
29 Jul
2022
Correspondence
26 Jul
2022
Report published
12 Jul
2022
Correspondence
5 Jul
2022
Correspondence
5 Jul
2022
Correspondence
28 Jun
2022
Correspondence
28 Jun
2022
Correspondence
Oral evidence sessions 4 sessions
24 May 2022
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Daniel Osgood · Department for Business, Energy & Industrial Strategy Dermot Nolan · Ofgem Jonathan Brearley · Ofgem Neil Kenward · Ofgem Neil Lawrence · Ofgem Rt Hon Kwasi Kwarteng MP · Department for Business, Energy and Industrial Strategy
19 Apr 2022
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Chris O’ Shea · Centrica Hayden Wood · Bulb Energy Jake Brown · Avro Energy Keith Anderson · ScottishPower Michael Lewis · E.ON Simone Rossi · EDF
22 Mar 2022
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Energy pricing and the future of the energy market and the impact of energy prices industry
Dr Richard Leese · Energy Intensive Users Group Gillian Cooper · Citizens Advice Martin Lewis CBE · Money Saving Expert Nishma Patel · Chemical Industries Association Paul Wilson · Federation of Small Businesses Rachel Fletcher · Octopus Energy Rachel Fletcher · Ofwat Simon Oscroft · So Energy
8 Feb 2022
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Oral evidence session
Emma Pinchbeck · Energy UK Jonathan Brearley · Department for Energy Security and Net Zero Jonathan Brearley · Ofgem Jonathan Marshall · The Resolution Foundation Neil Kenward · Ofgem Neil Lawrence · Ofgem Peter Smith · National Energy Action Stephen Fitzpatrick · OVO Energy
Title HC No. Published Items Response
Third Report - Energy pricing and the future of the Energy Market HC 236 26 Jul 2022 59 Responded
Recommendations & Conclusions
20 results
Clear
2 Conclusion Accepted
Third Report - Energy pricing and …
The lack of ongoing requirements for suppliers operating in the market allowed thinly capitalised companies...
The lack of ongoing requirements for suppliers operating in the market allowed thinly capitalised companies to rely on customers’ money to fuel business growth and operate with either no hedging or inadequate hedging against future energy prices. These companies took … Read more
Government Response
Ofgem accepts the recommendations of the Oxera report in full, including the development of consumer interest and competition frameworks, and will seek further views from stakeholders.
Department for Business and Trade
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11 Conclusion Accepted
Third Report - Energy pricing and …
We expect Ofgem, as the independent regulator, to clearly outline to Ministers and Parliament the...
We expect Ofgem, as the independent regulator, to clearly outline to Ministers and Parliament the risks and consequences associated with the delivery of Government objectives. We do not believe that Ofgem properly raised the risks to Government, or Parliament, that … Read more
Government Response
Ofgem has worked with Government to introduce the Public Interest Business Protection Tax and is committed to working with suppliers and Insolvency Practitioners to ensure current rules and Consumer Protection regulations are adhered to.
Department for Business and Trade
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14 Recommendation Accepted
Third Report - Energy pricing and …
We require Ofgem to start regularly and proactively reporting to the Department on how it...
We require Ofgem to start regularly and proactively reporting to the Department on how it is meeting its duties and to inform Ministers of any risks associated with the delivery of Government strategy. We ask the Department and Ofgem to … Read more
Government Response
Ofgem launched its supplier stress testing regime earlier in 2022 and is analysing the responses to the second iteration ahead of winter. Ofgem plans to develop an adaptive framework to ensure the right level of resilience, while minimising unnecessary burden and barriers to innovation. build on this to deliver a new capital adequacy regime.
Department for Business and Trade
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16 Conclusion Accepted
Third Report - Energy pricing and …
We recognise that this Committee has an important role in the scrutiny of Ofgem’s activity.
We recognise that this Committee has an important role in the scrutiny of Ofgem’s activity. We expect the regulator to be carrying out its core functions and delivering on its duties. It is neither feasible nor appropriate for Parliament to … Read more
Government Response
The government describes the 2021 consultation between Ofgem and BEIS on supplier payment default under the Renewables Obligation, and indicates that Ofgem published a consultation in June this year which included measures to protect money collected to meet Renewables Obligation payments.
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26 Conclusion Accepted
Third Report - Energy pricing and …
Our first priority is to ensure that customer credit balances are protected, so that in...
Our first priority is to ensure that customer credit balances are protected, so that in the event of a supplier failure, customers are always able to recover the credit 78 Energy pricing and the future of the energy market they … Read more
Government Response
Ofgem has announced four Market Compliance Reviews to drive improvement across the market.
Department for Business and Trade
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27 Recommendation Accepted
Third Report - Energy pricing and …
Ofgem must publish a more robust impact analysis of its proposals for energy suppliers to...
Ofgem must publish a more robust impact analysis of its proposals for energy suppliers to ringfence customer credit balances. We expect the impact analysis to be based on evidence received from suppliers following an information request so that it is … Read more
Government Response
Ofgem already publishes data on customer debt on a quarterly basis, arising from analysis of data gathered under Social Obligations Reporting.
Department for Business and Trade
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31 Conclusion Accepted
Third Report - Energy pricing and …
We welcome more frequent calculations of the price cap if this stabilises the supplier market...
We welcome more frequent calculations of the price cap if this stabilises the supplier market amid current market conditions. However, Ofgem’s cost benefit analysis of its proposed move to quarterly price cap updates did not consider the impact that further … Read more
Government Response
The government states that the introduction of the Energy Price Guarantee means there is no longer a risk of prices increasing for consumers in January and Ofgem is reviewing its approach in light of the Energy Price Guarantee and will update the Committee in due course.
Department for Business and Trade
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33 Conclusion Accepted
Third Report - Energy pricing and …
The Energy Bill [HL], which was introduced to Parliament on 6 July 2022, included provisions...
The Energy Bill [HL], which was introduced to Parliament on 6 July 2022, included provisions to extend the energy price beyond 2023, but it will not change how the price cap functions. Neither the Government nor Ofgem has undertaken an … Read more
Government Response
The government is introducing the Energy Price Guarantee to protect households from the spiralling costs of energy and will consider how price protection needs to evolve as the energy system changes.
Department for Business and Trade
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34 Recommendation Accepted
Third Report - Energy pricing and …
We ask Ofgem to undertake an immediate review of the costs and benefits of the...
We ask Ofgem to undertake an immediate review of the costs and benefits of the energy price cap to inform decisions about its operation and alternative forms of price protection.
Government Response
Ofgem carries out detailed reviews of the costs and benefits to consumers for every decision made with regard to the price cap, such as those published in early August 2022. There will be an opportunity for a wider review of all elements of the the energy price cap will be undertaken as part of discussions with Government on the future of price protection for consumers as the Energy Price Guarantee draws to a close.
Department for Business and Trade
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35 Recommendation Accepted
Third Report - Energy pricing and …
We call on the Government to consider the introduction of a social tariff for the...
We call on the Government to consider the introduction of a social tariff for the most vulnerable customers and a relative tariff for the rest of the market, to be introduced once wholesale energy prices have stabilised. We ask the … Read more
Government Response
The government states it is already protecting households through the Energy Price Guarantee and other existing policies, and will consider how price protection needs to evolve, with next steps to be set out in due course.
Department for Business and Trade
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40 Recommendation Accepted
Third Report - Energy pricing and …
In order to deliver the Government’s target of a zero carbon electricity system by 2035,...
In order to deliver the Government’s target of a zero carbon electricity system by 2035, we further recommend that greater consideration is given to smart tariffs in the revised Energy Retail Market Strategy. Specifically, we ask the Government to consider … Read more
Government Response
The government indicates industry is making progress on implementation of market-wide half-hourly settlement, which Ofgem believes will be an important enabler of a more flexible, low carbon and low-cost energy system.
Department for Business and Trade
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41 Recommendation Accepted
Third Report - Energy pricing and …
We are gravely concerned by the latest forecasts from industry experts that the price cap...
We are gravely concerned by the latest forecasts from industry experts that the price cap will increase to £3,244 in October 2022 and £3,363 in January 2023. This will have very serious consequences for households across the country, particularly those … Read more
Government Response
The government announced the Energy Price Guarantee, limiting typical household energy bills to £2,500 per year for two years, and highlighted other existing targeted support measures for vulnerable households.
Department for Business and Trade
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46 Recommendation Accepted
Third Report - Energy pricing and …
Ofgem should require energy suppliers to take a pro-consumer approach to payments and debt collections.
Ofgem should require energy suppliers to take a pro-consumer approach to payments and debt collections. We urge Ofgem to take swift and firm action in response to suppliers breaching the Ability To Pay licence conditions and ensure that suppliers promote … Read more
Government Response
Ofgem has announced four Market Compliance Reviews to drive improvement across the market, including one focused on how suppliers support customers in debt or payment difficulty and is taking enforcement action where necessary.
Department for Business and Trade
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47 Conclusion Accepted
Third Report - Energy pricing and …
Energy prices are expected to increase to unprecedented levels and the Government’s May 2022 support...
Energy prices are expected to increase to unprecedented levels and the Government’s May 2022 support package will no longer offset the significant increases for households. A considerable number of households will struggle to pay their energy bills and will be … Read more
Government Response
The government outlined actions to support people and businesses with their energy bills and tackle the root causes of the issues in the UK energy market, including the 'Energy Price Guarantee' and targeted support for vulnerable households.
Department for Business and Trade
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48 Recommendation Accepted
Third Report - Energy pricing and …
We recommend that the Government develops a scheme to help vulnerable customers accelerate the repayment...
We recommend that the Government develops a scheme to help vulnerable customers accelerate the repayment of debt that has accrued as a result of the energy pricing crisis, for example, by matching the contribution made by customers through the Fuel … Read more
Government Response
Ofgem publishes data on customer debt on a quarterly basis, arising from analysis of data gathered under Social Obligations Reporting, and intends to publish updated analysis quarterly thereafter.
Department for Business and Trade
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50 Conclusion Accepted
Third Report - Energy pricing and …
We are concerned by reports that self-disconnection is already at a record high, and this...
We are concerned by reports that self-disconnection is already at a record high, and this is before the expected, unprecedented rise to the energy price cap this winter. Ofgem only collects partial data on self-disconnection and does not have a … Read more
Government Response
Ofgem introduced a quarterly request for information to gather data from larger domestic suppliers on self-disconnection and Ofgem's view is that it would be preferable to have longer-term data available before making it publicly available.
Department for Business and Trade
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54 Recommendation Accepted
Third Report - Energy pricing and …
Energy efficiency is the quickest and most cost-effective way to reduce gas demand and lower...
Energy efficiency is the quickest and most cost-effective way to reduce gas demand and lower household energy bills. The absence of a home insulation programme is an unacceptable gap in policy that must be urgently rectified. Since wholesale prices rose … Read more
Government Response
The government states that energy efficiency is a key priority and details the Energy Price Guarantee, the Energy Bills Support Scheme, and its commitment to improve homes to EPC band C by 2030.
Department for Business and Trade
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55 Recommendation Accepted
Third Report - Energy pricing and …
We reiterate our previous views that the Government should implement urgent, far- reaching, and long-term...
We reiterate our previous views that the Government should implement urgent, far- reaching, and long-term measures to replace the Green Homes Grant scheme that provides the energy efficiency supply chain with confidence of enduring demand and ends the stop-start policy … Read more
Government Response
The government has committed £6.6bn this Parliament to improve homes to EPC band C by 2030, is consulting on raising Minimum Energy Efficiency Standards for privately rented homes to EPC band C by 2028, and is considering options to deliver £9.2bn to improve energy efficiency across homes, schools and hospitals.
Department for Business and Trade
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58 Conclusion Accepted
Third Report - Energy pricing and …
The impact of the energy price crisis on households is ongoing and severe, particularly in...
The impact of the energy price crisis on households is ongoing and severe, particularly in the context of other considerable inflationary pressures, and is likely to cause an unacceptable rise in fuel poverty and hardship this winter. With wholesale Energy … Read more
Government Response
The government states it has already set out decisive action including the Energy Price Guarantee and other targeted support to address the energy price crisis.
Department for Business and Trade
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59 Recommendation Accepted
Third Report - Energy pricing and …
With the worst yet to come, the consequences of the energy price crisis and wider...
With the worst yet to come, the consequences of the energy price crisis and wider cost-of-living crisis on customers, and energy suppliers, is still to be seen. The extent of these challenges cannot be dealt with by BEIS or Ofgem … Read more
Government Response
The government has taken decisive action to support people and businesses, including the Energy Price Guarantee limiting typical household bills to £2,500 a year for two years, the Energy Bill Relief Scheme providing a discount on wholesale prices for non-domestic customers, and targeted support for vulnerable households.
Department for Business and Trade
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Government Response AI assessment · 59 of 32 classified
Accepted 20
Acknowledged 23
Deferred 7
Not Addressed 9
Total 32 recs + 27 conclusions
Correspondence 19 letters
31 Jan 2023 Note from Ofgem incl. compliance and enforcement strategy, and detail for resourcing for compliance and enforcement
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21 Sep 2022 To committee Letter from the Minister for Energy, Clean Growth and Climate Change relating to the special administration of Bulb, 5 September 2022
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6 Sep 2022 To committee Letter from the Secretary of State relating to the special administration of Bulb Energy, 16 August 2022
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29 Jul 2022 To committee Letter from Chair to Rishi Sunak MP on energy bills, 26 July 2022
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29 Jul 2022 To committee Letter from Chair to Liz Truss MP on energy bills, 26 July 2022
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12 Jul 2022 To committee Letter from the Secretary of State relating to the Energy Security Bill, 6 July 2022
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5 Jul 2022 To committee Letter from the Minister for Energy, Clean Growth and Climate Change relating to the Special Administration of Bulb Energy, 28 June 2022
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5 Jul 2022 To committee Letter from the CEO of Ofgem relating to his appearance before the Committee last month, 27 June 2022
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28 Jun 2022 To committee Letter from the Secretary of State to Alan Brown MP following up from the session on energy pricing, 20 June 2022
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28 Jun 2022 To committee Letter from the End Fuel Poverty Coalition to the Chief Executive of OFCOM relating to energy markets, 14 June 2022
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14 Jun 2022 To committee Letter from the Chair to autoswitchers in the energy market, 26 May 2022
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24 May 2022 To committee Letter from the CEO of Centrica following up from his appearance before the Committee, 11 May 2022
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24 May 2022 From committee Letter to the Chancellor relating to the projected increase in the energy price cap, 24 May 2022
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24 May 2022 To committee Letter from the Minister of State for Energy, Clean Growth & Climate Change relating to Special Administration of Bulb, 17 May 2022
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17 May 2022 Correspondence from the Minister for Energy, Clean Growth and Climate Change relating to the Special Administration of Bulb, 27 April 2022
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20 Apr 2022 To committee Letter from the Minister for Energy, Clean Growth and Climate Change relating to the special administration of Bulb Energy
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19 Apr 2022 To committee Letter from Lord Callanan on the Warm Home Discount and Energy Company Obligation schemes
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1 Mar 2022 To committee Letter from Centrica on the energy market and customer credit balances
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1 Mar 2022 To committee Letter from Ofgem in follow up to oral evidence on energy pricing and the UK energy market
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