Energy Supply: Costs

Department for Business, Energy and Industrial Strategy written question – answered on 20th September 2021.

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Photo of Richard Thomson Richard Thomson Shadow SNP Deputy Spokesperson (Treasury - Financial Secretary), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland)

To ask the Secretary of State for Business, Energy and Industrial Strategy, whether (a) his Department and (b) Ofgem have made an assessment of the potential effect of the mutualisation of costs from energy supplier failures on low-income consumers.

Photo of Richard Thomson Richard Thomson Shadow SNP Deputy Spokesperson (Treasury - Financial Secretary), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland)

To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will ask Ofgem to make an estimate of the costs of energy supplier failure in (a) Scotland and (b) the UK, including (i) managing the supplier of last resort process, (ii) covering the cost of consumer credit balances and (iii) unpaid renewables obligations, since January 2018.

Photo of Richard Thomson Richard Thomson Shadow SNP Deputy Spokesperson (Treasury - Financial Secretary), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland)

To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will make representations to Ofgem on the need for any new rules proposed under the Supplier Licencing Review to ensure that suppliers are not able to use an uninformed line of credit in the form of customer credit balances.

Photo of Richard Thomson Richard Thomson Shadow SNP Deputy Spokesperson (Treasury - Financial Secretary), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland)

To ask the Secretary of State for Business, Energy and Industrial Strategy, what discussions he has had with Ofgem on protecting consumers from higher bills as a direct result of energy supply company failures, where credit balances and unpaid renewables obligations are thereafter mutualised across other suppliers.

Photo of Greg Hands Greg Hands The Minister of State, Department for Business, Energy and Industrial Strategy

The Government wants a competitive and innovative supply market, and continues to promote competition as the best driver of value and service for customers.

In a competitive market, it is normal for suppliers to exit the market from time to time. Unfortunately, some energy suppliers are facing pressures due to sudden increases in global gas prices. If a supplier fails, Ofgem will ensure customers’ are moved to a new supplier, household credit balances will be protected and gas and electricity supply will continue uninterrupted. My Rt. Hon. Friend the Secretary of State has been clear that protecting consumers shapes the Government’s entire approach on these gas price spikes.

Ofgem has reviewed their approach to supplier licensing with their resultant package of measures aimed at driving up standards across the energy retail sector by promoting more responsible risk management, improving governance, increasing accountability, and enhancing Ofgem’s market oversight. Additionally Ofgem is considering the responses to its March 2021 consultation on further measures that would require suppliers to automatically refund customers’ credit balances every year and protect any amounts they hold above a certain threshold.

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