Centrica (LON:CNA) is to launch a legal challenge against the UK’s upcoming energy price cap, arguing it has not been calculated fairly, the BBC reports. The news comes after the British Gas owner warned last month that it expects a £70-million impact following industry regulator Ofgem’s energy price caps, and that the cap is likely to result in some negative near-term impact on earnings and cash flow, particularly next year.
Centrica’s share price has slipped marginally into the red in London this morning, having lost 0.15 percent to 135.59p as of 08:51 GMT. The stock is fractionally outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.30 percent lower at 6,691.53 points. The shares have lost about 1.5 percent of their value over the past year, as compared with a near 12-percent dip in the Footsie.
Centrica to challenge price cap
The BBC reported yesterday that Centrica had said that it would apply for a judicial review against industry regulator Ofgem, arguing that the watchdog has set the threshold too low. The British Gas owner explained that it did not want to delay the price cap, due to come in on January 1, but rather, to change how it is set.
The FTSE 100 company argues that Ofgem has not properly taken into account the wholesale energy costs that ‘all suppliers incur’ when it devised the cap.
Ofgem meanwhile told the BBC that it had “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”.
“In the event of a judicial review we would defend our proposals robustly,” the watchdog pointed out.
As of 08:55 GMT, Friday, 21 December, Centrica PLC share price is 135.59p.