The energy price cap has “completely failed” argued John Penrose, the Conservative MP who first called for the mechanism in parliament.
Speaking on Utilita Energy’s podcast yesterday, he called on Business Secretary Kwasi Kwarteng to make the price cap a relative fee in line with the insurance market, with a maximum difference between lowest and highest prices.
Penrose also wanted to make it possible for energy firms to hedge long-term to save resources, and reduce Ofgem’s role in the market to reduce regulation and “let the customer be King or Queen”.
The MP said the current tariff was the “wrong type of price cap”.
Before the price cap was introduced, Penrose had called for a relative tariff to prevent loyal customers being penalised with higher costs than people who switched suppliers more regularly.
Instead, the government has established an absolute number which is reviewed every six months by market regulator Ofgem – which Penrose believes was “snatching defeat from the jaws of victory”.
He said: “The price cap isn’t rocket science, and we can all see what needs to happen. I just hope people listen to this podcast!”.
His comments follow Bulb entering special administration on Monday, where it will be de-facto nationalised, and run by administrators with loans and grants from the Business Department,
Scottish Power’s CEO Keith Anderson also called for Ofgem’s price cap to be reformed yesterday.
Anderson told the BBC “the energy market was broken and the government’s price cap was largely to blame”,
Ofgem lifted the price cap on household gas and electricity bills by 12 per cent to £1,277 in October.
This did not stop 21 energy firms ceasing trading over the past three months, as they were unable to pass on soaring wholesale price rises to consumers.
Ofgem has previously reported it will launch a review of the price cap, with findings reported by February next year, ahead of an expected hike in April.
After Bulb’s fall from grace on Monday, the government told City A.M. it remains committed to the energy price cap.
A spokesperson said: “Our priority remains protecting consumers, which is why the Energy Price Cap will remain in place to ensure millions of customers pay a fair price for their energy this winter.”