Ofgem director steps down after decision on price cap change
Christine Farnish has quit her role as a non-executive director over Ofgem’s decision to change the way it calculates the energy price cap
Ofgem‘s decision to change the price cap methodology has made one of its non-executive directors quit.
Christine Farnish, a non-executive member of Ofgem’s governing authority Gas and Electricity Markets Authority (GEMA) told The Times she felt the energy regulator “had not struck the right balance between the interests of consumers and interests of suppliers”.
In her interview, Ms Farnish, who has a range of regulatory, consumer and financial services experience, explained that she disagreed with the decision to change the price cap to enable suppliers to recover rising wholesale costs sooner.
She said she wanted suppliers to recoup current high energy prices over 12 months instead of six months that other members of the board wanted, to reduce the risk of companies going bust.
A few days ago, in its announcement on the new price cap methodology, Ofgem said the new process will ensure prices charged to billpayers are a better reflection of current costs, allowing energy suppliers to “better manage their risks”.
Christine Farnish has served as an independent director of Ofwat and chairs the P2PFA, a body representing peer-to-peel lending platforms.
She joined the National Association of Pension Funds as Chief Executive Officer in 2002 and in 2006 joined Barclays as Group Managing Director of Public Policy, a role she held until 2011.
Labour’s Shadow Environment Secretary Ed Miliband said: “This is further proof that the government is asleep at the wheel when it comes to the energy bill crisis. In no other country have 32 energy suppliers gone bust.
“It is intolerable that the Conservatives oppose Labour’s plan to freeze energy bills this winter.”
An Ofgem spokesperson told ELN: “We are thankful to Christine for her many years of devoted service to Ofgem. Due to this unprecedented energy crisis, Ofgem is having to make some incredibly difficult decision where carefully balanced trade-offs are being weighed up all the time.
“But we always prioritise consumers’ needs both in the immediate and long term. The rest of the board decided a shorter recovery period for energy costs was in the best interest of consumers in the long term by reducing the very real risk of suppliers going bust, which would heap yet more costs onto bills and add unnecessary worry and concern at an already very difficult time.”
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