Ofgem has activated ‘supplier of last resort’ measures as Extra Energy ceases trading. The company has around 108,000 domestic accounts and 21,000 business customers.
Gillian Guy, Chief Executive of Citizens Advice, said: “Today’s news and other recent supplier failures again highlight how essential it is that suppliers operating in the market have sustainable business models.”
The company is the sixth to go out of business this year. Ofgem responded by announcing plans for new tests for companies applying for new supply licences. They would have to demonstrate to Ofgem that they will have the funds and resources to manage their business for at least 12 months after entering the market, and provide the regulator with a plan to meet their customer service obligations, including Ofgem’s complaint handling standards and obligations to assist customers in vulnerable circumstances.
Ofgem is also consulting on tightening its test of whether applicants are ‘fit and proper’ to be granted a licence.
The new measures should take effect in late spring 2019.
Ofgem will consult separately on proposals to introduce new reporting requirements for existing suppliers. This will involve regular reporting to Ofgem on the adequacy of companies’ financial and operational resources for running their business, providing customer service, making sure they can continue to serve their customer base and meet their financial obligations under government schemes.
It will also consult on a range of options including on how suppliers accrue, hold and use customers’ credit balances and how to ensure they can make the payments they owe under the Renewables Obligation.
On Extra Energy, Ian Barker of Bfy Consulting noted: