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| Version 2 | Version 3 |
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| British Gas owner challenges energy price cap | British Gas owner challenges energy price cap |
| (25 days later) | |
| British Gas owner Centrica has launched a legal challenge against the government’s energy price cap, just days before around 11m households are due to save money from the measure. | British Gas owner Centrica has launched a legal challenge against the government’s energy price cap, just days before around 11m households are due to save money from the measure. |
| The firm said it would apply for a judicial review of how energy regulator Ofgem had calculated wholesale costs under the cap. | The firm said it would apply for a judicial review of how energy regulator Ofgem had calculated wholesale costs under the cap. |
| The company stressed it was not trying to delay the limit, which is expected to save households on default tariffs an average of £76 per year from 1 January. | The company stressed it was not trying to delay the limit, which is expected to save households on default tariffs an average of £76 per year from 1 January. |
| “Through this action Centrica has no intention to delay implementation of the cap, and does not expect the cap to be deferred in any way,” it said. | “Through this action Centrica has no intention to delay implementation of the cap, and does not expect the cap to be deferred in any way,” it said. |
| Iain Conn, the group’s chief executive, has been one of the most vociferous critics of the government policy. Sarwjit Sambhi, managing director of the group’s UK Home unit, repeatedly refused to rule out a challenge when questioned by MPs last year. | Iain Conn, the group’s chief executive, has been one of the most vociferous critics of the government policy. Sarwjit Sambhi, managing director of the group’s UK Home unit, repeatedly refused to rule out a challenge when questioned by MPs last year. |
| Ministers have previously warned a legal challenge risked damaging the reputation of the whole sector. | Ministers have previously warned a legal challenge risked damaging the reputation of the whole sector. |
| “The government will strongly condemn any efforts to frustrate the process of putting the cap in place,” the energy minister, Claire Perry, said in a letter to the big six energy suppliers. The government has not commented on Centrica’s challenge. | “The government will strongly condemn any efforts to frustrate the process of putting the cap in place,” the energy minister, Claire Perry, said in a letter to the big six energy suppliers. The government has not commented on Centrica’s challenge. |
| The company’s case focuses on a change Ofgem made between May and September on the cap’s methodology. | The company’s case focuses on a change Ofgem made between May and September on the cap’s methodology. |
| The regulator originally proposed using the wholesale price of April to September 2018 to set the cap, but later switched to a different period, February to July 2018. That would potentially hit companies in the pocket depending on how they hedged when buying energy. | The regulator originally proposed using the wholesale price of April to September 2018 to set the cap, but later switched to a different period, February to July 2018. That would potentially hit companies in the pocket depending on how they hedged when buying energy. |
| That bill appears to be a one-off hit of around £70m for Centrica, based on a trading update it published in November. One analyst said that Ofgem had effectively “moved the goalposts” without consultation. The challenge only relates to the first three months of the cap, before it is likely be adjusted upwards in April. | That bill appears to be a one-off hit of around £70m for Centrica, based on a trading update it published in November. One analyst said that Ofgem had effectively “moved the goalposts” without consultation. The challenge only relates to the first three months of the cap, before it is likely be adjusted upwards in April. |
| The regulator said it would “robustly” defend its proposals. “Ofgem carried out an extensive consultation process when setting the price cap and we believe that it offers consumers on poor value tariffs a fairer deal,” a spokesperson said. | The regulator said it would “robustly” defend its proposals. “Ofgem carried out an extensive consultation process when setting the price cap and we believe that it offers consumers on poor value tariffs a fairer deal,” a spokesperson said. |
| The application for a challenge is expected to be heard in January. | The application for a challenge is expected to be heard in January. |
| Centrica | Centrica |
| Utilities | Utilities |
| Energy bills | Energy bills |
| Energy industry | Energy industry |
| Household bills | Household bills |
| Consumer affairs | Consumer affairs |
| Ofgem | Ofgem |
| news | news |
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