Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what steps (a) his Department and (b) Ofgem have taken to mitigate the future risk of mutualisation of the cost of customer credit balances in the event of supplier failure.
On 15 December 2021, Ofgem announced an Action Plan to develop a package of measures to boost financial resilience in the energy retail market. Since then, they have taken several immediate actions to improve financial resilience.
On mutualisation of the cost of customer credit balances specifically, Ofgem’s proposals target surplus balances, reducing the amount at risk of mutualisation, while allowing suppliers to continue to collect credit balances where these are required to help even out customer payments throughout the year.
More detail on steps being taken is available in their 14 April 2022 Open Letter to domestic energy suppliers which can be found here: https://www.ofgem.gov.uk/publications/open-letter-domestic-energy-suppliers-financial-resilience.