Powerful committee of MPs to launch sweeping review of energy market as taxpayers face £3bn bill – £100 per household – for failed suppliers
A powerful committee of MPs is poised to launch a sweeping review of the energy market as taxpayers face a £3 billion bill – £100 per household – for failed suppliers.
The Commons Business, Industrial and Energy Strategy committee will discuss plans for an inquiry on Tuesday, The Mail on Sunday can reveal.
Once it gets the green light, committee chairman Darren Jones aims to launch the probe ahead of Christmas before grilling Ministers, regulator Ofgem and energy bosses early next year.
Probe: The inquiry will scrutinise the role of Ofgem and the energy price cap to protect customers from soaring energy bills
The inquiry will scrutinise the role of Ofgem and the energy price cap to protect customers from soaring energy bills triggered by a spike in global gas prices.
Analysis for the MoS by price comparison site TheEnergyShop indicates the failure of Bulb and 26 other energy suppliers since January, hitting more than 4.2million customers, could cost taxpayers £3billion – just over £100 for each of Britain’s 28million households.
The bill includes a £1.7billion Government bailout to fund Bulb through the winter after Britain’s seventh largest supplier, with 1.6million household customers, collapsed into special administration last Wednesday.
Jones said: ‘This £1.7billion liability is yet another burden on people’s energy bills. Are there going to be others? How much of a cheque is the Chancellor writing to the Business Secretary to be able to underwrite this?’ Jones said Ofgem’s chief executive, Jonathan Brearley, would be called to give evidence in public alongside Business Secretary Kwasi Kwarteng, Energy Minister Greg Hands and energy industry bosses.
He added: ‘There will be some fairly tense discussions. We need to understand what happened and how we improve things. We don’t want to have a punch-up with Jonathan, but there will be significant questions the regulator will need to answer.’
Jones said the inquiry will examine whether Ofgem needs a more ‘interventionist’ approach to suppliers reporting financial distress and whether the ‘misleading’ price cap should be reviewed.
‘Consumers don’t really understand what it [price cap] is,’ he said. ‘We need to cut through the commercial positioning and understand what really works for customers.’
The inquiry’s findings would likely help inform a new Energy Bill next year.
A Whitehall source said Ministers recognise market reform is inevitable, adding: ‘Once the fog has lifted, and global gas prices have returned to normal, we will need to look at the retail market more seriously.’
The source insisted the £1.7billion handed to Bulb’s administrators is a loan and that the Government hopes to recover the majority, potentially through a sale of Bulb or its assets.
But Joe Malinowski, founder of TheEnergyShop, said Ministers are ‘away with the fairies’ if they believe the money will be recouped, adding: ‘Households will unquestionably carry the losses for this calamity.’
Gillian Cooper, head of energy policy at Citizens Advice, said: ‘It’s alarming so many suppliers haven’t been able to weather the storm.
‘Reforms are urgently needed to protect customers and taxpayers from paying the price when energy companies collapse.’
Business News Governmental News Finance News
Need Your Help Today. Your $1 can change life.