£2.7bn needs to be paid for energy supplier collapses

Customers will more than likely wish to shoulder the £2.7 billion cost made by companies that exit the market in the recently past months.

That’s one of the findings of a brand new report by the National Audit Office (NAO) which indicates Ofgem’s approach to licensing and monitoring suppliers expanded the danger and cost of companies’ failures.

The authors of the reported information note that the manager had what is defined as a ‘low bar’ manner to licensing new suppliers.

“It (Ofgem) did not undertake detailed scrutiny of their financial position when they applied for a licence or after they entered the market.” The NAO stated.

Earlier this week, Ofgem suggested new measures to protect customers and futureproof the energy market from further energy supplier failures.

“Ofgem accepts the findings of the NAO report, which aligns with our own conclusions and the recommendations from the independent Oxera report we commissioned, and we are already working hard to address all of the issues raised, an Ofgem spokesperson added.

“While the once-in-a-generation global energy price shock would have resulted in market exits under any regulatory framework, we’ve already been clear that suppliers and Ofgem’s financial resilience regime were not robust enough. This contributed to a significant number of failures since August 2021.

“We welcome the NAO’s recognition that Ofgem began tightening the rules in 2018 and has continued to do so through to 2022. Our announcement this week continues this process with protection of customer credit balances and tough new measures to improve the financial health of energy suppliers.

“While no regulator can, or should, guarantee companies will not fail in the future, we will continue to take a whole-market approach to further strengthen the regulatory regime, ensuring a fair and robust market for consumers which keeps costs fair as we move away from fossils fuels and towards affordable, green, home-grown energy.”

£2.7bn needs to be paid for energy supplier collapses