British Gas owner Centrica is seeking a judicial review of Ofgem's impending energy price cap, which is designed to prevent energy suppliers from overcharging customers.
Centrica is pursuing a legal challenge to get Ofgem to change the way in which it calculated wholesale energy costs by altering the period the regulator used, which relates to forward contracts from February to July 2018.
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 UK's top share index is down more than 0.5% at 7,012 points in early trading.
Top faller on the index is Centrica, with shares down more than 8% after it revealed a hit of around £70m from the incoming energy price cap.
Meanwhile, European shares are firmly in the red, with Italian banks dragging the sector lower
as bond yields rise over renewed worries about Italy's EU budget debacle.
BreakingCentrica expects price cap hit
British Gas owner Centrica has warned that Ofgem's incoming default tariff energy
price cap will hit earnings by around £70m in the first quarter of 2019.
In a trading statement, Centrica said: "As previously indicated, we expect the price cap to result in some negative near-term impact on earnings and cash flow, particularly in 2019 before we have fully realised planned cost efficiencies."
British Gas sheds more customers
More on the £70m hit Centrica expects from Ofgem's energy price cap...
The company says that while the ongoing impact of the cap is in line with previous forecasts,
the regulator's recent revisions to calculation changes meant it would take the
one-off earnings hit in the initial period after the cap comes into force in
Centrica also revealed that British Gas shed 372,000 household accounts in the four
months to the end of October as it moves customers off standard variable tariffs ahead of the cap and amid high levels of switching in the market.
British Gas now has 3.1 million customers on the its SVT, down from 4.3 million
at the start of the year, and it expects this to reduce further below 3 million
by the end of the year.
Melrose tops FTSE 100 risers
Despite reporting a £303m interim loss, Melrose Industries is leading the FTSE 100 risers at midday.
Melrose said the loss was due to "significant acquisition related
charges" but chief executive Christopher Miller said: "Plans have been agreed and are now being implemented to realise the full
potential of GKN's world-leading, but currently under-developed, businesses."