Martin Lewis has slammed new proposals by Ofgem as a “f***ing disgrace that sells consumers down the river".
The financial expert was in attendance at a briefing on Monday regarding proposals by the energy regulator to ease costs.
As reported by the Daily Express, the energy price cap surged by 54% in April up to £1,971 per year for households on default tariffs.
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Ofgem announced on Monday that the price cap may be reviewed as many as four times a year, with the first price cap period under the new regime being calculated by considering the last six months of wholesale gas and electricity prices — which have been at a record high.
Ofgem chief executive Jonathan Brearley stated that the proposed changes may result in households having their energy bills increased up to four times per year, though also stressed that they could drop too.
However, in its briefing with the MoneySavingExpert founder, Ofgem said it was not making its proposed market stabilisation charge “harsher to really 'stop the harmful effects of competition'”.
According to Lewis, Ofgem stated that the charge would “prevent other firms needing to 'exit the market'”, though added that it would “lock in advantage to higher charging incumbent former monopoly firms”.
The two charges — the quarterly cap review and market stabilisation charge — resulted in the financial guru slamming the proposals as a “f***ing disgrace that sells consumers down the river".
He apologised to Ofgem staff for the remark, before explaining his concerns in more detail on BBC Radio 5’s 5 Live Drive show.
Lewis stated that the proposal was "being sold as if it's beneficial to consumers”, before adding: "Let’s be very plain: it’s not consumer groups who are suggesting this, it is the industry to protect energy firms”.
He continued: “My view is that we need to make sure we have fit and proper checks so that the new companies are able to have financial stability if they’re offering a cheaper rate.
“But ultimately, the first duty of an energy regulator, especially in the cost of living crisis, is to protect consumers, and this charge effectively says it will be very, very difficult for new companies to offer prices cheaper than the price cap when the whole sale price drops down.
“And that just doesn’t seem to be the right policy decision for me.”
Lewis went on: “This boils down to a simple fact, there are two ways to run an energy market: You either regulate prices, which could include nationalising firms and regulating prices, or you go for a privatised model where you have competition.
“We have gone for a privatised model, rightly or wrongly … and then we’ve capped prices, and we’ve put in this anti-competitive clause, and effectively we’ve got a halfway house which is neither model.
“This has killed, and will kill, all future competition, so what’s the point of having a privatised market if you effectively are regulating against competition?”
He added that he departed the meeting, stating “at least get rid of the outrageous charges on the standing charge” as “even if you cut all your usage because you’re desperate, the standing charge is so expensive you’re still paying a huge amount of money for gas and electricity, even if you’re not using it”.
The money expert then stated that “the market is just broken” and “it doesn’t feel right” for consumers.
Taking to Twitter, Lewis issued an apology for his earlier language regarding the Ofgem proposals.
He said: “I lost it when getting a briefing about today's proposals, where it feels like at every turn, in these desperate times where lives are at risk, it has ignored all asks for consumers and instead kowtowed to the industry (I hope history proves me wrong).
“Please accept that was (and this is) an emotional rant, not a considered piece.
“I pray when I do further analysis I have to apologise again as I've got it very wrong (if not I worry about dire consequences for consumers - we must do more to make things better for them).”
National Energy Action, which campaigns to prevent fuel poverty, said Ofgem’s changes could “cause further immense financial strain”.
Director of policy at NE Peter Smith also added: “This change has the aggregate impact of reducing protections for fuel-poor households.”
