Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, whether (a) his Department and (b) Ofgem have made an assessment of the potential effect of the mutualisation of costs from energy supplier failures on low-income consumers.
The Government wants a competitive and innovative supply market, and continues to promote competition as the best driver of value and service for customers.
In a competitive market, it is normal for suppliers to exit the market from time to time. Unfortunately, some energy suppliers are facing pressures due to sudden increases in global gas prices. If a supplier fails, Ofgem will ensure customers’ are moved to a new supplier, household credit balances will be protected and gas and electricity supply will continue uninterrupted. My Rt. Hon. Friend the Secretary of State has been clear that protecting consumers shapes the Government’s entire approach on these gas price spikes.
Ofgem has reviewed their approach to supplier licensing with their resultant package of measures aimed at driving up standards across the energy retail sector by promoting more responsible risk management, improving governance, increasing accountability, and enhancing Ofgem’s market oversight. Additionally Ofgem is considering the responses to its March 2021 consultation on further measures that would require suppliers to automatically refund customers’ credit balances every year and protect any amounts they hold above a certain threshold.