The board of energy regulator Ofgem has resigned, accusing rule changes of putting businesses ahead of consumers and increasing the average UK home’s energy bill by £400.
Christine Farnish, a non-executive member of Ofgem’s board of directors, the Gas and Electricity Markets Authority (Gema), submitted her resignation to business secretary Kwasi Kwarteng in early August.
According to a leaked internal Ofgem announcement, Farnish said regulators “gave companies too much at the expense of consumers.” Across his 27 million retail energy customers in the UK, a £400 increase in annual bills for him could cost households more than £10 billion.
Ofgem is under pressure after being accused by some critics of failing to prevent the bankruptcy of 29 energy suppliers from mid-2021 onwards. Rising global energy prices pushed the energy price cap above £4,200 in January, more than doubling his current level, and the crisis is expected to worsen. The bill increase is expected to add to inflation that has reached 10.1% and deepen the cost of living crisis facing the UK.
Regulators have repeatedly faced criticism for prioritizing business interests over consumers, especially with plans to increase price cap updates from two to four times a year. Consumer rights expert Martin Lewis previously accused the company of “selling out consumers.”
Ofgem has removed her profile from its website, but there has been no official announcement of Farnish’s departure. Furnish was previously a board member of the British Association of Travel Agents, the Water Regulator of Of Watts and a Managing Director of Barclays.
It is understood that she opposed changes in the methodology used to calculate price caps that determine the average annual cost households pay. You will be able to bill your customers for additional “postpaid” costs.
Ofgem’s internal announcement regarding Furnish’s resignation stated: [by businesses]However, Christine believed that this was too profitable for businesses at the expense of consumers.
“In light of this principled disagreement, she offered her resignation to the Secretary of State, who accepted it.”
A government source said Ofgem told her that all but two UK energy suppliers would collapse this winter if the £400 bill was not brought forward. Ofgem has previously argued that failure to allow energy companies to charge more would “create even greater financial pressure on an already strained supply market.”
The controversy is just the latest issue facing Ofgem CEO Jonathan Brearley, who has led the regulator since February 2020. He has previously admitted that the UK retail energy industry, overseen by Ofgem, was “not resilient enough”, and this month he said the energy price cap was “clearly not for the purposes of today’s markets.” It doesn’t fit,” he said.
There is also dissatisfaction within Ofgem, with staff telling The Guardian that morale is down following a number of negative news stories about the organization. It is believed that all employees were questioned as to whether they were
Government sources said a decision on financial support related to the energy bill would fall to a new prime minister under a new Conservative leader on 5 September.
Shadow Climate Change and Net Zero secretary Ed Miliband said Furnish’s resignation was “further evidence that the government is in control when it comes to the energy bill crisis.”
“For 12 years, the Conservative Party has completely failed to regulate the energy market. No other country has gone bankrupt with 32 energy suppliers,” he said. “Labour’s fully funded plan will solve the problem immediately and in the future. will save him £1,000.”
We have reached out to the government business unit for comment.
Furnish did not respond to a request for comment.
A spokesperson for Ofgem said: This followed a decision the board agreed with, which she felt was untenable. She was due to resign in January. ”
