Consumer advocacy organisation Citizens Advice has expressed concerns regarding Ofgem‘s proposal to increase the profit margin allowed for energy suppliers.
The charity argues that the proposal lacks sufficient justification and evidence, raising doubts about its consumer benefits.
In their response to Ofgem’s consultation, Citizens Advice highlighted several issues. They questioned Ofgem’s decisions that have shifted risks onto consumers, rather than suppliers.
They also criticised the reliance on comparisons to airlines, instead of considering the unique risks in the energy sector.
Citizens Advice added: “Proposals are based on how Ofgem wishes suppliers to behave, particularly with regard to capitalisation, rather than how it requires them to or how they behave in practice.”
A few days ago, Ofgem Chief Executive Officer, Jonathan Brearley, sent a letter to all domestic energy suppliers, urging them to learn from the energy crisis and prepare for the retail sector’s expected return to profitability after five years of losses.
In the letter, Brearley emphasised that Ofgem is prepared to take action against suppliers that lack sufficient capital if they prioritise dividends over recapitalisation.
