The government is to review the Energy Retail Market Strategy in light of the slew of supplier collapses in 2021.
In a statement, secretary of state for Business, Energy and Industrial Strategy (BESI) Kwasi Kwarteng outlined the plans to invite views on updating the strategy.
Published earlier in 2021, the current strategy covers how future government policy can protect consumers, enable energy companies to create innovative low-carbon solutions and how it can facilitate active market competition to create more low-cost flexibility in the energy system.
Once the retail energy market has stabilised in the short-term, the government will look to engage with the sector, taking into account lessons learnt in recent months.
The government in particular is interested in understanding how the retail market can achieve the best outcomes for consumers, how companies can drive private investment to deliver net zero, and how the retail market – including the regulatory framework and energy price cap that underpins it – may need to evolve to enable a low-cost, flexible and resilient energy system that protects customers.
In the meantime, the government is pausing policy development on the public consultation on opt-in and its test of opt-out supplier switching. Kwarteng expressed his gratitude to those who had contributed to the consultation so far.
“The last few months have seen unprecedented increases in the levels and volatility of wholesale gas prices across the globe. This has been due to multiple international factors in supply and demand and has led to a shift in the size and shape of the energy retail market, with a significantly higher number of supplier exits than would normally be expected during this period,” said Kwarteng.
“Three principles have consistently guided the Government’s response. Customers, and particularly vulnerable customers, should be protected. We will not be bailing out failed companies with poor business models. And we must not return to the cosy oligopoly of the past.”
The review follows regulator Ofgem setting out further steps to ensure the stability of suppliers in the retail market, including a financial stress test.
Throughout 2021, 27 suppliers have collapsed, including 25 since gas prices began to truly spike from August.
This includes; Zog Energy, Orbit Energy, Entice Energy, Bulb, Social Energy Supply, Neon Reef, Omni Energy, MA Energy, Zebra Power, Ampoweruk, CNG Energy (electricity and gas), Bluegreen Energy Services, Goto Energy, Pure Planet, Colorado Energy, Daligas, ENSTROGA, Igloo Energy, Symbio Energy, Hub Energy, Green Network Energy, Simplicity Energy, Avro Energy, Green Supplier, Utility Point, People’s Energy, PfP Energy, MoneyPlus Energy and Hub Energy.