Citizens Advice response to Ofgem’s Energy price cap methodology: contracts for difference review call for input
In light of the absence of systematic under-recovery, and given suppliers’ ability to manage volatility, we see little justification for departing from the current methodology for the CfD allowance. If any potential amendments reduce risk for suppliers, this can be in the interests of consumers, but lower risks would need to be reflected in lower returns. Were a reconciliation approach adopted, this would pass on all risks to consumers. The current system where suppliers bear risk with the possibility of mitigating is a fairer system than consumers bearing all risk.