Policy and Regulation Insights
INSIGHTS
Staying ahead of policy and regulation
Staying ahead of policy and regulation is crucial in the energy and utilities sector, directly impacting how suppliers operate and engage with customers. As Ofgem continues to refine the price cap, energy providers face persistent challenges in balancing regulatory compliance with financial sustainability.
At BFY, we bring extensive experience in managing regulatory change, having worked with 75% of the energy retail market before, during, and after the energy crisis. Our insights offer valuable guidance and address key questions, including:
- How are the latest changes to the price cap affecting suppliers and the wider energy market?
- What strategies can energy providers implement to balance regulatory compliance with financial stability?
- How can suppliers future-proof their operations in response to evolving policy and regulatory demands in the energy sector?
Insights
Policy and Regulation
Energy debt hits record £3.8bn, as Ofgem propose initiatives to raise standards
Energy debt has reached a new high of £3.8bn as of Q3-24, up £134m from the previous quarter, and £0.9bn over the past year. Alarmingly, £2.9bn (75%) of this debt remains without any repayment arrangement in place, with 2m customers in this bracket. Total debt has almost tripled since 2020, and the volume of customers without repayment arrangements is up 700k (55%) in the same period.
Price Cap at £1,738 – stable bills, but customer support remains critical
Ofgem have today (22 Nov) announced a £21 (1%) increase in the energy Price Cap, rising to £1,738 from January 2025. This increase won’t significantly impact bills, but affordability challenges continue, as Ofgem and the government consider options to address the underlying issues.
Realising Ofgem's vision for a leading customer-centric Energy sector
Ofgem's customer service ambition makes it clear that today's service standards aren't deemed acceptable, with rising bills and record debt levels only amplifying these calls for change. It represents a new opportunity for suppliers to build a leading culture for customer-centricity, as we show here.
Price Cap rising to £1,717 in Oct-24, savings available to those who fix now
Ofgem have today (23 Aug) announced a 10% increase (£149) in the headline Price Cap, which will rise to £1,717 for a typical Direct Debit (DD) customer from October. It’s the highest level since Q1-24, and follows two consecutive falls.
Price Cap to increase 10% in Oct-24, but annual bills stay flat
Ofgem's headline Price Cap is set to increase 10% this Winter (~£140 rise from October-24), but demand-weighted annual bills are expected to remain flat. Based on our projections, customers' annual bills should be ~£1,700 from 01 October, staying unchanged since April-24
Price Cap falls again to £1,568 - and more changes are coming
Ofgem’s headline Price Cap has decreased by £122 (7%) in today’s announcement (24 May), falling to its lowest level since October 2021, at £1,568 for a typical Direct Debit customer. However, we know this isn’t a real bill value that customers experience.
Non-domestic Review: How should you prepare for change?
Non-domestic energy customers will be entitled to better customer service, more support resolving disputes, and greater transparency in a raft of new measures announced by Ofgem. And be aware – it wants action fast.
Price Cap at £1,690 – Welcome relief, and more competitive tariffs?
Ofgem have announced that April’s Headline Price Cap will be £1,690 a fall of £238 (12%) compared to Q124, now standing at its lowest level since October 2021.
Could we see a Price Cap of £1,650 from April?
Based on the observation window so far, and a modelled view of the remaining window, we could see a Q2-24 Price Cap of ~£1,650 but a +/- £100 uncertainty. This gives a latest range of £1,550 - £1,760. By mid-January, we expect price uncertainty to be +/- £30 as the window closes out.
Policy and Regulation
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John partners with our clients to deliver transformation and performance improvement - focussing on operational improvement, strategic and regulatory programme delivery, and process design/implementation.
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