Industry warns MPs have set ‘dangerous precedent’ on price cap appeal

The government has set a ‘dangerous precedent’ by preventing suppliers from being able to appeal to the competition authority against Ofgem’s rulings on price cap levels, Energy UK has warned.

The select committee report, published earlier this week, backs the government’s decision in the draft price cap bill not to allow energy companies to appeal to the Competition and Markets Authority (CMA) against the regulator’s price controls decisions.

Under the legislation, suppliers will have to judicially review Ofgem in order to challenge the cap that has been set by the regulator.

The committee said that allowing a right of appeal to the CMA would ‘unnecessarily delay further the successful implementation of the cap’.

Lawrence Slade, chief executive of Energy UK, told Utility Week that the body was ‘disappointed’ at the government’s stance, which was out of line with the CMA’s powers governing other utility price control decisions.

He said: “It also sets a dangerous precedent if such decisions are no longer subject to challenge on their substance – it risks more arbitrary interventions in future and creating uncertainty that could spread to other sectors and companies.

“We still hope that when it takes forward the legislation, the government recognises that, as the expert body long established for this purpose, the CMA would represent a consistent approach and is also a more appropriate and effective way of reviewing these types of decision than judicial review.”