Energy rebate that could have cost new suppliers dearly

Electricity customers have received two £12 payments via the Government Electricity Rebate scheme. Ofgem E-serve, which administered the scheme, said it was pleased with the process. But one new supply company said the cost of administering the rebate placed an unnecessary burden on small companies.

The GER was intended to help lower the impact of environmental and social policy costs on consumer energy bills and it ran in 2014 and 2015. All licensed domestic electricity suppliers were obligated to apply the rebate to bills which, over the two years the scheme operated, totalled £645 million.

In a 2016 interview with New Power Report, fledgling supplier Bulb said the rebate could have caused the new company major problems if it had been growing fast.

It was part of ” a growing burden placed on small suppliers”. Bulb’s Hayden Wood told New Power: “We had to pass on … £25 over two rebates. That was designed with larger suppliers in mind. The fact that you have to make that rebate to customers before you get paid by the government – it’s a big cashflow issue. That would have really worried us if we were at the stage we are now.”

Wood added that he had concerns over other burdens placed on new companies, including measures planned by the Competition and Markets Authority: “There is a risk that additional regulation when things change will affect small suppliers” more than large ones, he said.

Chris Poulton, managing director of Ofgem E-Serve, said: “I’m pleased with our successful administration of the GER scheme in its second and final year.

“Unlike other schemes, the GER was designed to provide a rebate to all households in Great Britain with a domestic electricity account and the high volume nature of this brought its own challenges.

“We will draw upon the lessons learned and experience gained from delivering the GER scheme to drive best practice among suppliers, particularly those who have obligations to deliver rebates under the Warm Home Discount scheme.”

Subscribers: login to read the full interview with Bulb founders Amit Gudka and Hayden Wood

Further reading:

Ofgem’s E-serve gets ready to compete for business after 2018 spin-off

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What is the future for E-Serve and the industry’s other scheme administrators?

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