A non-executive director at Ofgem has resigned in protest at the regulator's handling of changes to the way the energy price cap is calculated, which will add hundreds of pounds to household bills.
Christine Farnish said she left her part-time role at the organisation, for which she received an annual £20,000 honorarium and £3,000 in allowances, because she did not believe that the regulator had "struck the right balance between the interests of consumers and the interests of suppliers".
Her dramatic move follows changes to the methodology underpinning the cap that will enable electricity and gas suppliers to recoup wholesale energy-hedging costs more quickly. Ofgem previously said the change was a vital step to prevent more suppliers going out of business.
Analysts said the move would add in excess of £400 per household to the price cap in January next year, a figure that will come on top of price increases that will almost double the present level of the cap, which is currently £1,971.
Farnish said she had resigned because she could not support the decision to recover additional supplier costs from consumer bills this winter.
“Board decisions on the price cap are never easy,” she told The Times. “You have to weigh up a number of factors like the sustainability of the market and the impact on consumer energy bills. However, the board are charged with an overarching legal duty to protect the interests of consumers.
“My interpretation was that Ofgem should not add further costs to consumer bills. I didn't feel that struck the right balance between the interests of consumers and the interests of suppliers.”
In a statement yesterday, Ofgem thanked Farnish for her service over the past six and a half years. But it also pointed out that she had been due to stand down from her role in early 2023.
“Her contributions have been enormous, as a board member, the chair of our people and remuneration committee, and a very willing source of counsel to Ofgem colleagues in many areas,” the regulator said.
“Throughout her time with Ofgem she has actively and vocally championed the consumer interest, putting this at the heart of her proposals, decision-making and interactions with colleagues.
“As Christine’s term was due to finish within the next six months, the process to recruit a replacement is already under way.”