The head of Ofgem, Jonathan Brearley, has issued a stern warning to energy suppliers in light of the recent energy crisis in Great Britain. He emphasized that Ofgem will take action to prevent excessive profits and urged companies with weak finances to refrain from paying dividends. Brearley acknowledged that the country has experienced an unprecedented energy crisis in the past two years and assured that Ofgem will closely monitor the market to prevent profiteering.
He stated, “We will closely monitor the price cap to ensure that it accurately reflects the reasonable costs incurred in the market. We have already made adjustments to the price cap as prices rose and suppliers faced significant losses. Similarly, we will act swiftly to modify the price cap if we observe undue rewards across the sector as prices fall and profits recover.”
The price cap sets a maximum price that energy suppliers can charge consumers for each kilowatt hour (kWh) of energy consumed, thus limiting their ability to make excessive profits. Brearley highlighted that this year, suppliers are likely to generate substantial profits due to the cost recovery allowances introduced earlier, in addition to the regulated profit margin.
He explained, “While it is important for companies to recover costs and make reasonable profits to ensure a sustainable and competitive market, we expect them to prioritize their customers’ interests.” In recent years, energy suppliers have faced significant losses, with numerous companies going bankrupt, resulting in a total cost of £2.7bn for consumers. Brearley emphasized that Ofgem will take action against any suppliers that fail to prioritize their customers’ needs and do not pass on the price reductions to consumers. He also urged companies with weak financial resilience to refrain from paying dividends until they have sufficient resources to handle future price shocks.
Brearley concluded, “Our goal is to establish a stable and financially resilient energy market for consumers. We will not tolerate companies that take unnecessary financial risks and prioritize their shareholders at the expense of their customers.”
While energy prices have decreased, the average annual bill for a typical household in Great Britain remains over £1,000 higher than before the crisis. Ofgem recently reduced the price cap for standard dual-fuel tariffs to £2,074, but most households will not experience significant relief. This is primarily because the government’s universal support for energy bills, including the £400 credit and the energy price guarantee, which limited average energy costs to £2,500, have ended.
Brearley expressed concern for vulnerable customers who may struggle to pay high energy bills this winter. He suggested the need for targeted support for those most affected and pledged to work with the government to address this issue.
In summary, Ofgem’s chief executive, Jonathan Brearley, has sent a clear message to energy suppliers, warning against excess profits and urging financial responsibility. He emphasized the need to prioritize customers’ interests, pass on price reductions, and provide excellent customer service. Ofgem will take action against non-compliant suppliers and support vulnerable customers who may struggle to pay their winter energy bills.
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