ONE of Ofgem’s board members has quit after accusing the energy regulator of prioritising companies over customers.
Non-executive director at Ofgem Christine Farnish said she had resigned because the “regulator didn’t get the balance right and gave too much benefit to companies at the expense of consumers”.
She said: “It’s a judgment call. Answers aren’t particularly palatable but you want the interests of consumers to come first.”
Her departure came as Ofgem decided to change the way it calculates the energy price cap, in a move which analysts have warned could add hundreds of pounds to household bills.
Farnish’s resignation is yet another blow to the regulator, which has come in for heavy criticism from consumer groups, MPs and the National Audit Office over its handling of the energy crisis.
Ofgem said at the beginning of August that it was changing the methodology for the cap to enable suppliers to recoup the full costs of buying energy for their customers at current very high prices.
The regulator insisted the changes were needed in order to prevent more suppliers going bust, after the costly failure of about 30 companies since the start of January 2021.
Martin Young at Investec warned the tweaks could push the energy cap to around £4200 a year in January, increasing from a previous estimate of £3725.
The cap is currently £1971 a year based on a typical household’s consumption.
Other analysts have since revised their forecasts higher in light of the combination of the change to methodology and further increases in wholesale gas and electricity prices.
Ofgem confirmed the methodological changes at the same time as it announced it would update the price cap every three months rather than just twice a year.
This also led to criticism from fuel poverty campaigners.
Farnish is a former chair of Consumer Focus as well as a previous non-executive director at water regulator Ofwat.
SNP MSP Natalie Don said the decision showed how "out of touch this regulator has become".
She continued: "Ofgem don't seem to understand that a price cap is meant to limit prices not act as a tool for the naked profiteering that the energy companies are engaged in.
"The comment from the former director reflects how many people feel, that the regulator has put the self-interet of the energy companies well ahead of the interests of consumers.
"It is estimated that around one third of Scottish residents could find themselves in fuel poverty due to these excessive rises."
Don added that she "welcomed the resignation" as it would put more pressure on the UK Government to do more to protect energy consumers.
She added: "We need action now before more people fall into debt and face the awful choice between eating or heating.
"This fiasco merely higlights why Scotland needs the power of independence to protect everyone in energy-rich Scotland from the profiteering of energy companies."
An Ofgem spokesperson said: “Due to this unprecedented energy crisis, Ofgem is having to make some incredibly difficult decisions where carefully balanced trade-offs are being weighed up all the time.
“But we always prioritise consumers’ needs both in the immediate and long term.
“The rest of the board decided a shorter recovery period for energy costs was in the best interest of consumers in the long term by reducing the very real risk of suppliers going bust, which would heap yet more costs on to bills and add unnecessary worry and concern at an already very difficult time.”
Ofgem has faced criticism after dozens of smaller suppliers have shut down in the past 18 months, adding more costs to household bills linked to the transfer of their customers to other companies.
