Ofgem director Christine Farnish resigns over energy price cap |  Ofgem

Ofgem director Christine Farnish resigns over energy price cap | Ofgem

A director of energy regulator Ofgem has resigned, accusing it of favoring businesses over consumers with a rule change that will add up to £400 to the average UK household energy bill.

Christine Farnish, a non-executive member of the Gas and Electricity Markets Authority (GEMA), Ofgem’s board, tendered her resignation to Business Secretary Kwasi Kwarteng in early August.

Farnish said the regulator “gave too many benefits to businesses at the expense of consumers,” according to a leaked internal Ofgem announcement. Across the UK’s 27 million retail energy customers, a £400 increase in annual bills could cost households more than £10 billion.

Ofgem is under pressure after some critics blamed it for failing to prevent the collapse of 29 energy providers since mid-2021. The crisis is expected to worsen with rising global energy prices, which will push the ceiling of the price of energy to more than £4,200 in January, according to estimates, more than double its current level. The rising bill is expected to add to inflation, which hit 10.1%, and deepen the cost of living crisis facing the UK.

The regulator has faced repeated criticism that it is putting commercial interests ahead of consumers, in particular with plans to increase price cap updates from two to four times a year. Consumer rights expert Martin Lewis has previously accused him of “selling out to downstream consumers.”

There has been no public announcement of Farnish’s departure, although Ofgem has removed his profile from its website. Farnish was previously on the boards of water regulator Ofwat, the Association of British Travel Agents, and has been CEO of Barclays.

It is understood that he objected to a change in the methodology used to calculate the price cap, which determines the average annual cost paid by households. Under the change, energy providers will be able to charge customers for additional “back-haul” costs they incur by securing supplies in advance.

An internal Ofgem announcement about Farnish’s resignation said: “A majority of the board felt that compensation should be made in favor of a quicker recovery. [by businesses]. But Christine believed that this benefited companies too much at the expense of consumers.

“In light of this principled difference of opinion, she has offered her resignation to the Secretary of State, who has accepted it.”

Ofgem told him that all but two of the UK’s power providers would collapse this winter if the £400 charge was not applied, according to a government source. Ofgem has previously argued that not allowing power companies to charge more would cause “significant additional financial pressure in an already strained supply market”.

The dispute is just the latest issue facing Ofgem chief executive Jonathan Brearley, who has led the regulator since February 2020. He previously acknowledged that the UK retail energy industry, overseen by Ofgem, “wasn’t big enough.” resilient,” and this month said the energy price cap is “clearly not right for today’s market.”

There is also discontent within Ofgem, with staff telling The Guardian that morale is low after a lot of negative news about the organisation. Brearley is believed to have recently fielded questions on calls from all staff about whether the regulator is supporting consumers or providers.

A government source said any decision on fiscal support related to energy bills would be up to the new chancellor under a new Conservative party leader on September 5.

The government business department was contacted for comment.

Farnish did not respond to a request for comment.

An Ofgem spokeswoman said: “Christine resigned as non-executive director of Ofgem after six years of service on August 1. This followed a decision agreed by the board, but she felt that she could not support it. She was due to retire in January.”

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