Energy customers to foot £172 million bill after collapse of 11 energy suppliers

21 June 2019
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British households face a potential bill of £172 million from the collapse of 11 energy suppliers since January 2018.

Energy suppliers pay a number of industry bills, including renewable generation, infrastructure costs and metering costs.

Research from Citizens Advice shows that £172 million in unpaid industry bills was left behind by failed suppliers, which will likely have to be paid by consumers.

The charity also estimates that at least 32,000 have been left open to potentially aggressive debt collection practices by the administrators who took over these companies.

It warns that the administrators are not bound by the same rules as suppliers licensed by Ofgem, meaning they can pursue debts much more aggressively than usually allowed.

Citizens Advice gave the example of an elderly person who had agreed to pay £10 monthly towards their debt, but after their supplier failed, the administrators requested the full amount of nearly £350 and threatened to bring in bailiffs, leaving the customer feeling distressed and anxious.

It wants the government to take action to make sure administrators of all energy companies follow the same rules as suppliers.

It is also calling for legislation to ensure more regular payment of industry costs - in particular the Renewables Obligation (RO) - by suppliers, to stop the build up of big debts that paid by consumers.

Gillian Guy, chief executive of Citizens Advice, says: “Consumers shouldn't have to foot the multi-million pound bill left behind when companies collapse - and they certainly shouldn’t lose their usual protections in the process.

“The Energy White Paper is the perfect opportunity for the government to close the gap in protections and limit the cost to consumers of any future supplier failures. It must act now.”

Philippa Pickford, Ofgem's director for future retail markets, says: "Competition in the energy market has helped to drive down prices for consumers.

"Ofgem introduced new tests this summer for companies applying for a licence to supply energy, to help drive up standards, ensure they meet their industry obligations and reduce the risk - and cost - of supplier failure.

"Ofgem will also consult in the autumn on tougher rules for existing suppliers.

"Under Ofgem's safety net, if a supplier fails the energy supply and credit balances of its customers are protected.

"We agree with Citizens Advice that this process has generally worked well and we are looking at ways of improving the experience of these customers when they are transferred to new suppliers and to reduce costs associated with supplier failure."

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