British Gas owner Centrica wins Ofgem appeal over energy price cap
The High Court ruled in favour of British Gas owner Centrica’s appeal against the way that Ofgem calculated part of its energy price cap today.
The decision means that Ofgem will have to make adjustments to the price cap.
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The utilities group, which owns Big Six energy supplier British Gas, had previously said that the rules had cost the energy company £70m in the first three months of 2019.
Centrica asked for the judicial review over the fact that Ofgem had decided to change the dates within which wholesale prices were used to calculate the cap.
In a statement, Centrica welcomed the judgement of the court, saying:
“This outcome underlines the importance of transparent and rigorous regulatory processes to ensure well-designed regulation that is in the interest of a well- functioning energy market, which in turn allows participants to operate with confidence and ultimately benefits all energy consumers.
“We look forward to continuing to work closely with the government and the regulator on the development of future policy and we remain committed to delivering for our customers’ changing needs, including through our involvement in the transition to a lower carbon future.”
Fellow Big Six supplier Npower issued a public statement in support of Npower in January, whilst SSE and Scottish Power provided witness statements.
When it was introduced in January, the cap was set at £1,137, £68 lower than prices paid by 3.1m British Gas customers.
An Ofgem spokesperson said: “We are disappointed by the High Court’s judgment. Our overarching objective was to set the cap at a level that protected consumers.
“The judgement does not change the fundamentals of the price cap, which remains in place and will continue to protect 11 million households on default deals, ensuring that they pay a fair price for their energy.
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“We our considering our next steps in light of the judgement.”
According to Investec, the adjustment of the price cap in October, which was lowered on average £75 to £1179, caused energy prices to fall 4.4 per cent over the month, which in turn knocked the rate of inflation to a three year low of 1.5 per cent.
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