Letter to Ofgem responding to its request for feedback on how it should make allowance for Capacity Market costs in the second period of the default tariff price cap
Default electricity and gas tariffs are subject to a price cap, which limits how much suppliers can charge their customers. In setting that cap, the energy regulator, Ofgem, makes allowance for a range of costs that suppliers incur in serving their customers. One of these costs relates to a government policy, the Capacity Market, that is currently suspended following a court ruling. Ofgem issued an open letter in January 2019 setting out its proposals on how it would adjust the price cap in light of this suspension. This is our response to that letter.