Ofgem chief Jonathan Bearley has warned that soaring gas prices might not be temporary which will effect “well above” hundreds of thousands of customers.
In the coming months many more energy suppliers could go bust and the soaring gas prices is something we have not seen “before at this pace.”
Brearley said, “Have a look at the change in the gas price – it really is something that we don’t think we’ve seen before at this pace.
“We do expect a large number of customers to be affected, we’ve already seen hundreds of thousands of customers affected, that may well go well above that.
“It’s very hard for me to put a figure on it.”
Speaking to MPs at a Business, Energy and Industrial Strategy Select Committee (BEIS) hearing, many firms will go into administration, and he added, “We are going to want to have a ‘lessons learned’ after this.”
Bearley said, “It’s not unusual for suppliers to go out of the market. I think what is different this time is that dramatic change in the costs that those suppliers are facing.
“We do expect more [energy suppliers] not to be able to face the circumstances we’re in, but it’s genuinely hard to say more than that, partly because that means predicting what may happen to the gas price.”
Emma Pinchbeck told the BEIS committee, “I took this job a year ago. When I was hired, the chairman of Energy UK said that your biggest challenge is going to be the vulnerability of the retail market.
“I know that for a year or more before that my team have been making the case to the regulator and the government that the sector is fragile.
“There’s a short-term crisis here, which is in some ways out of our control – it’s to do with the gas prices – but it’s been exacerbated and arguably caused by our regulatory design.
“And that is a resilience and security of supply risk in the future. It’s terrible news for customers in the long run.”
Pinchbeck warned that regulators and politicians must stop dismissing what the supplier’s are saying as the market is flawed.
She added, “In any normal market we have companies that fail.
“The point is, right now, we think that good, well-run companies will fail. And that’s a function of both the pricing shock but also market design.”