Timeyin Akerele

They jump somewhere else.

But when the market seized up like it did in the middle of that crisis, they would drop onto the price cap because that's the default tariff.

If you don't pick a tariff, you stay with the supplier, but you go onto essentially the price cap tariff, the standard variable tariff.

Now that price was low because we set it six months in advance.

And so again, they were having to buy energy they didn't expect they'd have to buy.

At a much higher price because prices have shot up very quickly.

So part of the thing we did was move to a quarterly price cap.

So it much reduces that risk of disconnect between what suppliers are having to pay in the market and what actual energy customers are paying the energy supplier.

Because it's that gap that caused the huge problem for the energy company.

And like I say, the companies who had properly hedged were much better prepared, and most of them did survive.

But they still get caught by the price cap.

So in a normal market, there isn't a regulator or a government setting a fixed price for a six-month period.

So they ended up having more customers than they expected and having to supply those customers at a price below what it cost them to supply in the market.

It's a little bit complicated, but hopefully you can see that the best run companies survived because they were sensibly hedged.

But the ones who were taking more risk, I guess, to try and make more money, they generally didn't survive.

Yeah.

So the price cap is basically a, if you like, a backstop protection tariff for household customers who buy their electricity, their gas.

And what Ofgem does is calculate what we think are fair prices for that energy.

And we set it every three months.

But the point is that