Market failure

Extract 1: The regulator Ofgem sets a price cap on standard variable energy tariffs. The cap for a typical household reached £3549 a year in October 2022, though the government's Energy Price Guarantee limited bills to £2500. By mid-2024 the cap had fallen to about £1690 as wholesale gas prices fell. Extract 2: More than 25 small suppliers went bust in 2021–22 because they had sold energy at fixed prices without buying it in advance. Their customers were moved to the remaining large suppliers. The market is now dominated by a handful of firms. Extract 3: Energy producers made record profits. The government introduced an Energy Profits Levy (a windfall tax) on oil and gas producers, while offering investment allowances for new production. Environmental groups argued that support should go to renewables and home insulation instead.