Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what his policy is on the use of energy customer credit balances as working capital by energy suppliers.
On 25 November 2022, Ofgem set out a package of reforms to bolster consumer protection and ensure energy suppliers are more resilient to market shocks. Ringfencing customer credit balances would require suppliers to raise significant additional capital, increasing costs for consumers. However, Ofgem will be setting a monitoring threshold to avoid suppliers overly relying on customer credit balances.
The proposals also include the introduction of capital adequacy requirements for suppliers and require that suppliers ringfence Renewable Obligation receipts, to prevent these costs being socialised across the consumer base in cases of supplier failure.
Further details are available at: https://www.ofgem.gov.uk/publications/ofgem-launches-new-proposals-strengthen-energy-market-and-protect-consumers.