HOUSEHOLDS PAYING PRICE FOR FAILED ENERGY COMPANIES
Gordon MP Richard Thomson has tabled Parliamentary Questions on energy watchdog Ofgem stepping-back from moves to protect energy customers’ credit balances.
The SNP MP had previously tabled questions which revealed that despite a consultation as far back as October 2019 on protecting the credit balances of energy company customers, the UK Government failed to act and the subsequent collapse of 38 energy companies means households are picking up the cost of the lost balances. It is estimated that the additional cost added to energy bills for this is around £68.00 per household.
Commenting, Richard Thomson MP said:
“Ofgem had been consulting on stepping up financial resilience in the energy retail market and moving to protect customers’ credit balances. Inexplicably they now appear to be backtracking on this.
“Ofgem’s position had been that use of customers’ credit balances to fund working capital by energy suppliers is akin to using “interest free company credit cards”. But now they seem to accept using customers’ credit balances is acceptable behaviour up to a certain point.
“This makes no sense at all because when a company gets to that “certain point’ is likely to be when it fails – and then the costs are socialised over all energy companies, which has added about £4.5bn to UK energy customer bills over the last year. We are still in a very volatile market with the potential for recent history to repeat itself.
“There is a compelling argument for the UK Government to act to ensure a stronger regulatory framework for energy suppliers, to prevent a repeat of the current energy crisis, and to ensure consumers aren’t paying the price for sharp practice on the part of unscrupulous suppliers.”
Note: Parliamentary Questions tabled by Richard Thomson MP are as follows:
To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will take steps with Ofgem to introduce an obligation on energy suppliers to disclose to customers prominently in communications on (a) the sale of new tariffs and (b) other issues whether their credit balances are (a) ringfenced and protected or (b) being used as working capital.
To ask the Secretary of State for Business, Energy and Industrial Strategy, what his policy is on the use of energy customer credit balances as working capital by energy suppliers.
To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will take steps with Ofgem to introduce minimum capital requirements on energy suppliers before 2025.
To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will take steps to extend the Market Stabilisation Charge beyond March 2024.