Ofgem director resigns over winter bill

A director of Ofgem has resigned in protest at the decision to add hundreds of pounds to household bills this winter by changing the way it calculates energy price cap.

Christine Farnish said she had resigned because she did not believe that the regulator had struck the right balance between the interests of consumers and the interests of suppliers. Her resignation was a further blow to the regulator, which MPs have already accused of pushing up bills by being negligent and incompetent in its regulation of energy suppliers.

Ofgem announced earlier this month that it was changing the methodology of the cap to allow suppliers to recover wholesale energy hedging costs sooner. After the failure of 29 companies over the past year, the regulator said that the change was necessary to prevent more suppliers going bust.

According to Ofgem analysis, all two of the remaining suppliers could go bust or exit the market if it didn't make the change.

Analysts at Investec estimated that the methodological change would add more than 400 to the level of the price cap in January, taking it to an estimated 4,200 a year, from 1,971 at present.

Farnish, who had served as a non-executive director on Ofgem's board since 2016, told The Times : "I resigned from the Ofgem board because I could not support a key decision to recover additional supplier costs from consumer bills this winter. We always prioritize consumers needs in the immediate and long term.

The rest of the board decided to keep a shorter recovery period for energy costs in the long term in order to reduce the real risk of suppliers going bust, which would add more costs and add unnecessary worry and concern at an already very difficult time. She thanked Farnish for her many years of devoted service to Ofgem.