Britain’s second largest energy company has warned the regulator that a price cap for standard tariffs must be based on robust methodology if it is to avert serious consequences for the retail market.
Alistair Phillips-Davies, chief executive of SSE, said the success of the Conservative party’s election pledge for a market-wide cap on energy prices depends on Ofgem taking stock of the complexities, risks and costs of supplying energy.
The price must be set objectively, be regularly reviewed and be based on a full understanding of market realities, he warned.
Writing in the Telegraph the Big Six boss said that failing to take an objective approach could result in “serious consequences” for suppliers, and warned that it may do more harm than good to competition.
“If Ofgem can design any cap in a way that doesn’t fundamentally undermine the progress that’s been made in the market then that may be an outcome that can work. But that’s a big ‘if’,” he wrote.