In a recent letter to the Chancellor, Rt Hon Jeremy Hunt MP, on 14 March 2023, Ofgem, the government regulator for the electricity and downstream natural gas markets in Great Britain, has shared their concern over reports of the behaviour of some energy suppliers for the non-domestic market.
This comes after the Chancellor wrote to Ofgem on 9 January 2023 stating his concerns over some energy supplier practices. Some of these concerns were raised to Ofgem by Care England, on 15 November 2022, who alluded to the breach of certain regulatory conditions regarding “unduly onerous” charges being made on care providers, and concerns of energy suppliers profiteering at the care sectors expense.
The rises in wholesale electricity and gas prices have had a profound effect on businesses and individuals across the country and the adult social care sector has been in the eye of the storm, with some providers experiencing over 500% increases. As energy costs, security deposits and risk premia have increased, so has the care sector’s financial instability. Energy pricing follows the rocket and feather approach experiencing a rapid increase as wholesale energy rises, but a slow decline as it reduces by some energy suppliers, who continue to profit as a result.Ofgem has found emerging evidence of significant concern where they need to take a deep dive into the key issues such as:
- Deemed contract rates are higher than explained by market conditions.
- Significantly higher security deposits are required.
- Standing charges and risk premia have significantly increased.
- Non-compliance with the EBRS scheme
Care England is therefore proposing the immediate consideration of a mechanism which:
- Establishes why the current retail price remains excessively high vs the current wholesale prices which have fallen.
- Ensures deemed rates are reviewed and amended more frequently given their constant movement.
- More accurate assessment of security deposits and risk premia.
- Sees the cancellation of auto-renewal rates for all businesses, not just the present micro-business sector.
On 23 March, Professor Martin Green gave an interview on the topic. You can watch the full interview below: