Ofgem has insisted its supplier controls are sufficient to protect customers, defying criticism it received after last month’s collapse of GB Energy Supply.
In late November GB Energy Supply collapsed suddenly, citing “swift and significant” increases in energy prices and an inability of it to forward buy energy as a small supplier. This, according to a statement issued by the company, meant the business’ position had become “untenable”.
Its collapse came weeks after Tempus Energy also shuttered its supply division and saw a prediction made by Co-op Energy boss Ramsey Dunning at this year’s Clean Energy Live exhibition – that spiralling wholesale energy costs would send a major supplier bankrupt this winter – come true.
Ofgem reacted swiftly and the day after appointed Co-operative Energy as a replacement supplier for those impacted, but it did not prevent the industry regulator from being criticised for a perceived lack of proper controls.
Peter Haigh, managing director at independent energy supplier Bristol Energy, casted doubt over the reasons behind GB Energy Supply’s collapse, saying it was “simply not true”.
“We are smaller than GB Energy and we’ve been able to forward buy energy for our customers. In fact, we have put in a complete hedge for this winter and beyond. Suppliers that don’t do this are gambling on wholesale price movements, and will be forced to put their prices up for new customers. Or worse, may risk going out of business, because they don’t have the energy or the money needed to service their current customers.
“This is not responsible practice – and those who will now be suffering are GB Energy’s customers, the industry and their own colleagues, who will lose their jobs.
“We call on Ofgem to demand more rigorous suitability criteria for new suppliers as part of the market entry process, to include how the new supplier plans to buy their customers’ energy, how they plan to look after their energy needs, and to evidence the knowledge and experience their senior team have in the energy industry,” he said.
But in a statement issued to Clean Energy News, a spokesman for Ofgem insisted that numerous checks on suppliers are made before a licence to supply is issued.
“This includes asking for details of the company’s ownership structure and checking if any of the directors involved have been disqualified. We also ask for information about applicants’ arrangements to commence supply. In addition to our licensing checks, there are further checks and requirements under the industry codes that must be met before a company can enter the market.
“Our priority however is to protect customers. That’s why we have introduced a safety net to make sure that customers have a continuous supply of energy and to protect their credit balances if their supplier goes bust,” the spokesman said.