Picking up the pieces for failed suppliers will hit customer bills, says Citizens Advice

UK energy customers are facing a potential bill of £172 million from the collapse of 11 suppliers since January 2018, says Citizens Advice.

The charity says that was the total in unpaid industry bills left behind by failed suppliers – a cost that will likely be paid by consumers through their bills. It comprises £120 million to cover Renewables Obligation, Feed In Tariff and supplier of last resort levy (which will be passed through to consumers under Ofgem processes) and  £71 million of outstanding energy industry service costs, such as network charges and metering services (less 10% likely to be recouped)

Citizens Advice is calling for legislation to ensure more regular payment of industry costs – in particular the Renewables Obligation – to stop the build up of big debts that are then paid by consumers.

Customers made vulnerable

What is more, Citizens Advice says at least 32,000 people who owed money to failed suppliers have lost out on consumer protections (estimated from the  average 4.4% of the 720,000 affected who will have been in arrears). They have been left open to potentially aggressive debt collection practices by the administrators who took over these companies, becaue administrators are not bound by the same rules as suppliers licensed by Ofgem. This means they can pursue debts much more aggressively than usually allowed and customers can see the amounts they are being chased for go up overnight.

The watchdog says that since January 2018, it has helped over a thousand people with debt issues related to failed suppliers, with average debts of £250. It is calling on the government to use the forthcoming Energy White Paper to fix the protection gap for customers who owe money to energy suppliers when they collapse.

Further reading

Ofgem asks: how can you assess whether domestic competition is working well?

Ofgem: full steam ahead on faster switching

Ofgem to act over consumer protection for micro businesses

Ofgem sets out tougher regime for energy suppliers

Reader question: Where do you think the opportunity for public ownership exists in energy, and where might it be beneficial?