A former executive at the oil company BP has called for increases to the energy price cap to be scrapped and for suppliers that fail to help households struggling with bills to be nationalised.
Nick Butler, who worked for BP for almost 30 years and was group vice-president for strategy and development, said that expected rises in the cap should be abandoned by the industry regulator, Ofgem, which he said had been “overwhelmed by events” after turmoil in the global energy markets sent 29 British energy retailers to the wall.
Butler is also calling for a “forensic examination” of the accounts of remaining suppliers to ensure they are still viable businesses.
Ofgem is expected to announce next week a rise in the price cap, which is supposed to protect consumers. This could mean annual bills jumping from an average of £1,971 to £3,582.
Butler, who was a senior policy adviser to Gordon Brown, echoed the former prime minister’s view that energy firms unable to offer lower bills should be re-nationalised.
Writing for the Guardian, Butler said: “As with the financial sector in 2008, if the private energy sector fails to meet the needs of the society it serves, its functions must and will be taken on by the government. The companies involved now must show they understand that they must use their skills and resources in the public interest.”
Butler’s comments come as the government assesses options to help households facing soaring energy bills this winter. His former employer, BP, has been accused of “unfettered profiteering” during the energy crisis, aided by a rise in wholesale oil and gas prices caused in part by Russia’s invasion of Ukraine.
BP and other North Sea oil and gas operators have been hit by a windfall tax on their profits aimed at generating £5bn. Labour has suggested expanding the levy to fund further support for consumers.
Butler said that a freeze on the energy price cap was “necessary but far from sufficient”, arguing that the government and industry needed to take further action to help struggling families, such as ending “pernicious extra charges imposed for those using pre-payment meters”.
Butler, who was the founding chair of the policy institute at King’s College London and is an energy policy adviser at the Cavendish Laboratory, Cambridge, also urged the government to secure extra supplies of gas for the winter and move to reduce domestic consumption, as had other European nations.
He warned that if France and Norway decided to limit supplies to the UK this winter, there could be “real and substantial” shortages. “As we lurch towards a new winter of discontent the only hope is that the current crisis will drive us back to the substance and the detail of a serious energy policy.”
Source: The Guardian