LONDON (Reuters) - Centrica (CNA.L) owner of Britain’s largest energy supplier British Gas, said it is seeking a judicial review of the way regulator Ofgem has calculated part of its price cap, although it does not plan to delay the cap coming into effect.
Ofgem is due to impose a price cap from Jan. 1 on the most commonly used default tariffs as the government seeks to limit household utility bills.
The cap is expected to save UK households around 1 billion pounds a year.
Centrica said it sought to challenge the way Ofgem treated suppliers’ ability to recover wholesale energy costs when calculating the cap.
“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,” Centrica said in a statement published late on Thursday.
Ofgem set the cap at 1,138 pounds a year for a typical use customer, 68 pounds lower than British Gas’s current standard variable tariff, and well below the average prices of all of the big six energy firms.
“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 spokesman for the regulator said via email.
When it announced the plan in September, the regulator said it would review the cap to take into account any changes in wholesale prices and other costs, with the first review to take place in February, and any changes to take effect in April.
Wholesale energy costs have soared since the cap was calculated, leading analysts to forecast Ofgem will need to hike the level next year.
Reporting By Susanna Twidale; Editing by Susan Fenton