Silly question over the energy cap

[teabagg]

I'm sure there's a sensible answer!

Why do Ofgem allow the cap to be so high? I know it's based on the price of gas/electricity in the previous few months, but surely it's better to cap it lower, than to charge a windfall tax on the millions they are allegedly making and then have to credit people back, which is masses of administration.

Naive question I know, I'm sure there's a simple answer!

I'm guessing a one off hit to companies who may have already accounted for it, is "better" for those companies than a reduction in profit that would happen from a price cap. Which puts the companies at risk of collapse. Which is a hit to the tax payer for bailing them out. Those are the arguments, as far as I know.
Why we can't do what the French do... I don't know.

It's based on the cost of supply, the companies who sell us utilities don't actually make much money per account and at the moment are actually losing money, because the cap is lower than what it costs them to buy energy to sell to us, unless they've hedged, but this has probably run out and their new contracts are more expensive.

It used to be that the cap was a way to make sure people didn't go onto an expensive standard rate if they had a fix that ended and they didn't take another one up, and ended up on the standard rate. Then the whole market changed and here we are.