Martin Lewis brands Ofgem a ‘f***ing disgrace’ after regulator announced it may review energy price cap four times a year rather than two… meaning households could face higher bills
Money saving guru Martin Lewis has today apologised after unleashing a foul-mouthed rant at Ofgem staff after it revealed plans to change household energy prices up to four times a year.
The personal finance expert has issued a ‘formal apology’ after branding proposed changes a ‘f*****g disgrace’ while discussing plans with staff from the energy regulator.
It comes as Ofgem today said it was considering changing its biannual review of the energy price cap – which sets the maximum average cost of default standard variable tariffs – to every three months.
The energy regulator – which earlier this year increased the cap to a record £1,971 per year for the average household due to rising wholesale gas prices – said the plans would help firms more easily pass on savings more quickly.
But Mr Lewis, who founded MoneySavingExpert, said he ‘lost his rag’ at staff who were attempting to brief him about its proposed changes – among them the more regular price cap review.
Taking to Twitter to apologise about his reaction, he said: ‘I’d like to formally apologise to the Ofgem staff for losing my rag in a background briefing just now and saying its changes are a ‘f*****g disgrace that sells consumers down the river’.
The personal finance expert today issued a ‘formal apology’ after branding proposed changes a ‘f*****g disgrace’ while discussing plans with staff from the energy regulator
‘I should’ve behaved better. My ire’s institutional not individuals, its was inappropriate…
‘I lost it when getting a briefing about today’s proposals, where it feels like at every turn, in these desperate times where lives are at risk, it has ignored all asks for consumers and instead kowtowed to the industry (I hope history proves me wrong)…’
‘My breaking point was when hearing how instead of listening to calls to scrap its proposed market stabilization charge, it was making it harsher to really ‘stop the harmful effects of competition’ Ie staggeringly its aim’s to effectively STOP firms undercutting the price cap…
What is the energy price cap?
The energy price cap is the maximum price suppliers can charge customers on a standard or default tariff.
The price cap was introduced on 1 January 2019 by regulator Ofgem, with the aim of preventing the millions of households on expensive standard or default variable tariffs from being charged extortionate prices.
These tariffs, currently numbering about 23million, are set based on wholesale gas prices.
But wholesale gas prices have shot up in recent months, in part due to the impact of Covid, with demand spiking after restrictions were lifted, and also due to Russia’s invasion of Ukraine.
Russia has historically provided around 3 per cent of the UK’s natural gas supplies and significantly more in Europe.
That led Ofgem to significantly raise the cap by £700 earlier this year, to a record £1,971 per year.
And there have been warnings that it rise again in October, when the price cap is reviewed for a second time.
However there are suggestions that Ofgem could now change its review from bianuall to four times a year.
Ofgem says moving the review to every three months, instead of every six, will help pass on potential savings quicker.
But critics warn it could mean customers getting hit with four increases a year, instead of two.
‘Its logic was this would prevent other firms needing to ‘exit the market’. For years I’ve been pushing it for better controls in who they allow to set up energy firms. Yet now its way to stop it to lock in advantage to higher charging incumbent former monopoly firms…
‘Combine that with meeting industry’s demand for a new more frequent ‘every 3mth’ price cap change – Carefully calibrated for the first 3 months to include SIX months of wholesale prices (so the price factors in the highest wholesale rates in history) so firms don’t miss out…’
Issuing his apology, he said: ‘Please accept that was (and this is) an emotional rant, not a considered piece.
‘I pray when I do further analysis I have to apologise again as I’ve got it very wrong (if not I worry about dire consequences for consumers – we must do more to make things better for them).’
It comes as it was today revealed the price cap on household energy bills could be reviewed every three months under new plans mooted by Ofgem on Monday.
The energy regulator said that it might insert two new reviews a year, one in January and another in July.
It would help pass on savings from a potential fall in gas prices to customers more rapidly, Ofgem said, and also protect under-pressure energy suppliers from being damaged by the cap.
‘Today’s proposed change would mean the price cap is more reflective of current market prices and any price falls would be delivered more quickly to consumers,’ said Ofgem chief executive Jonathan Brearley.
‘It would also help energy suppliers better predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures, which ultimately pushes up costs for consumers.
‘The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.’
After a consultation, Ofgem hopes that the changes could come into force from October, meaning the first change under the new system would be made in January.
The energy price cap – currently at a record £1,971 per year for the average household – is reviewed every six months and changed in October and April.
Ofgem considers a range of information when deciding where the price cap should be set. The price that energy suppliers pay for the gas and electricity they buy is a major part of this.
Over the last year gas prices have risen so rapidly that suppliers were often forced to sell the gas for less than they bought it for due to the price cap.
By changing the price cap more often, Ofgem will make it more reflective of international gas prices, taking some of the pressure off suppliers.
The proposed changes to the cap will also allow suppliers to recover some other costs in a better timescale.
‘Our top priority is to protect consumers by ensuring a fair and resilient energy market that works for everyone,’ Mr Brearley said.
‘Our retail reforms will ensure that consumers are paying a fair price for their energy while ensuring resilience across the sector.’
Ofgem chief executive Jonathan Brearley has said that proposed changes to review the energy price cap four times a year would mean that bills could go up quicker, but they will also fall more rapidly.
‘Remember that the total cost you pay over the year would be absolutely the same, because that reflects only the cost of the energy that we buy,’ Mr Brearley told Sky News.
‘Yes, the price would go up more quickly as prices go up, but equally importantly as those prices come down, then the price cap comes back down again.
‘I remember back in the 2010s when people saw their prices go up and were waiting and wondering why prices didn’t come down equally quickly.
‘The good thing about the price cap is that we will make sure it only reflects costs, and therefore it only reflects what you need to pay for your energy.’
He added: ‘With the Russian invasion of Ukraine, we are seeing a sustained increase, a further increase, in gas prices. So, the difficult news I have is that it is likely in October that prices will go up again.’