Asked by: Baroness Altmann (Conservative - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask His Majesty's Government what protections they have in place to prevent energy firms from leaving households without power in their homes; and what penalties are imposed on energy firms that do not take sufficient care of vulnerable customers or which wrongly disconnect customers.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
Ofgem rules include an Ability to Pay Principle that requires suppliers to provide appropriate support for those struggling to pay their bills. Support may include setting up appropriate repayment plans based on a customer’s ability to pay, and by directing the customer to further support services.
Ofgem is responsible for ensuring licensed energy suppliers are complying with their licence conditions. Ofgem publishes details of its compliance and enforcement action on its website.
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask His Majesty's Government what consideration they have given to reforming the way in which Ofgem manages the energy price cap.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
There are no plans to do this.
As the expert independent regulator, Ofgem is responsible for operating the price cap. Ofgem remains the sole decision-maker over how it is calculated and has consulted extensively on its methodology for determining the cap level. The Government has confidence in Ofgem to set the cap at a level that reflects the underlying efficient costs of supplying energy.
The price cap was never intended to be a permanent feature of the market. As announced in the Autumn Statement, we are developing a new approach to protecting consumers’ energy prices from April 2024.
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask His Majesty's Government what instructions they have given to Ofgem on ensuring that the costs of failed energy firms do not fall more heavily on vulnerable customers and single person households.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
The costs of failed energy firms have contributed to an increase in standing charges. The energy regulator, Ofgem, reviewed whether the existing fixed charge was appropriate or whether a usage-based (volumetric) alternative would be more suitable.
Ofgem concluded that while some low consuming users, some of whom may be vulnerable, might benefit from change, there are a number of higher consuming users including vulnerable users that would pay more.
Ofgem’s current methodology protects users with greater energy needs, such as disabled users and users with electric heating in areas off the gas grid.
Asked by: Baroness Altmann (Conservative - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask His Majesty's Government what assessment they have made of the impact of increasing the retail customer energy standing charge; and what proportion of the increase in the standing charge is due to the need to compensate the customers of failed energy firms.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
The maximum standing charge is limited by the Ofgem price cap. Ofgem reviewed the components of the standing charge in the Summer of 2022 and concluded that maintaining the existing methodology would protect consumers with the greatest energy needs.
Standing charges vary by region, billing method and energy type and range from approximately £99 to £205. In figures published by Ofgem in November 2022, Supplier of Last Resort costs (for those customers whose provider ceases trading) accounts for £61 in the average customer’s energy bill.