Home Markets Poor regulation, not price cap, to blame for energy market mayhem

Poor regulation, not price cap, to blame for energy market mayhem

1

The cost of failed regulation in the energy market is mounting.

Keeping Bulb’s customers supplied with gas and electricity this winter will require a £1.7bn loan from the government to cover the defunct company’s working capital until April. That’s more than £1,000 for each of its 1.7m households, or about £60 per UK home.

Whether or not that money is ultimately lost depends on what can be recovered in the Bulb special administration process, in effect a form of government ownership, and what type of hedging the company did, in a market where regulator Ofgem reckons it costs £700 more than the current energy price cap to supply an unhedged customer at wholesale prices.

That isn’t the end of it, of course, for UK consumers. Bulb was too large to be handled by the supplier of last resort system that has cleared up over 20 failures since August by parcelling off customers to stronger suppliers. The cost there could be north of £2bn,…

Click here for full article…www.ft.com