Centrica to launch legal challenge to government cap

Centrica to launch legal challenge to government cap

Centrica is going to challenge the government’s energy price cap.

The British Gas owner has said apply for a judicial review against the review just days before the cap will come into place.

The cap, which will come into effect on January 1, will save households an average of £76 per year.

Centrica said earlier this year that the proposed government cap would cost the group £70 million in operating profits in the first quarter of 2019. The cap has been blamed for some smaller providers losing money.

In a statement, Centrica said: “Centrica plc is seeking judicial review of Ofgem’s decision of 6 November 2018, which relates only to the treatment of wholesale cost transitional arrangements and Ofgem’s decision not to investigate and correct its failure to enable the recovery of the wholesale energy costs that all suppliers incur.”

“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.”

“As we have previously said, we do not believe that a price cap will benefit customers but we want to ensure that there is a transparent and rigorous regulatory process to deliver a price cap that allows suppliers, as a minimum, to continue to operate to meet the requirements of all customers.”

The government has not yet commented on the legal challenge from Centrica.

The group is the UK’s biggest energy supplier and has over 12 million customers.

An insider on the matter said: “We want to ensure that the tariff cap being implemented by Ofgem proceeds in a fair and workable way, for all energy suppliers, and that it properly reflects the costs energy suppliers have incurred to supply customers.”

Npower and Scottish Power are said to have offered encouragement to Centrica but are not planning on joining the legal battle.

Shares in the group (LON: CNA) are currently trading -0.26% (1115GMT).