Clark: Ofgem should deliver price cap

Ofgem has the powers to end consumer detriment and should use them, energy secretary insists

Energy secretary Greg Clark has said Ofgem has the powers to deliver price regulation in the energy market, and that it should act to use them.

Clark made his comments in the House of Commons during a grilling from opposition MPs about the Conservative manifesto commitment to “introduce a safeguard tariff cap that will extend the price protection currently in place for some vulnerable customers to more customers on the poorest value tariffs.”

Clark insisted that he stood by this commitment, despite many commentators concluding in the wake of the Queen’s Speech that the government’s position on a price cap had softened. The speech made no mention of legislative measures to intervene in the energy market.

Shadow business secretary Rebecca Long-Bailey, challenged Clark on the matter, saying the Queen’s Speech was “not clear” about whether the Conservative minority government intends to pursue intervention.

She added that Clark’s letter to Ofgem last week, in which he asked the regulator to advise how it intends to resolve market failures in relation to vulnerable customers, microbusinesses and standard variable tariffs, was “not a direction to implement a price cap”.

The energy secretary responded: “The powers that I have are to ask Ofgem to move in this way, not to order it; Ofgem is independent”.

However, he added that consumer detriment in the energy market should be “put to an end as soon as possible, rather than waiting for legislation to pass through the House.

“Ofgem has those powers and I believe it should use them,” he concluded.

In the wake of Greg Clark’s letter to Dermot Nolan, urging him to provide solutions to key dysfunctions in the energy market, a group of former regulators led by Stephen Littlechild, former director general of electricity supply, also wrote to the regulator.

They urged Ofgem’s chief executive to challenge government’s conviction that market problems can be resolved through the introduction of price regulation.

In its own response to Clark’s letter, the regulator saind it shared government’s concerns about the energy market,

“We will shortly be setting out the work we have underway and further options we can explore in the light of the government’s plans,” it stated.