TotalEnergies Gas & Power

There have been 12 suppliers exiting the market in the last 12 months so what is going wrong and what does it mean for TGP and our customers?

Economy Energy, with 235,000 domestic customers, exited the market early in the new year, the second largest supplier to fail after Spark Energy late last year. When suppliers fail, customers are protected through an Ofgem guarantee called the “safety net” which means that the customers of the failed supplier are passed on through a tender process to another supplier. The new supplier is chosen by Ofgem under a mechanism called “supplier of last resort” or SOLR. The SOLR can claim costs associated with picking up the failed supplier’s customers to cover administration costs, hedging costs and costs to cover any credit balances on customer accounts. These SOLR costs, when approved by Ofgem, are charged to the energy networks who in turn pass them on to suppliers through increased distribution network charges. That is where TGP is impacted as we need to recover these unanticipated costs from our customers.

Who has exited the market and what happened to their customers? The following table shows the extent of the problem over the last 12 months:

Ofgem are reacting to the supplier failure issue with tougher vetting for new energy firms and closer scrutiny on customer service. They have promised to draw up a new series of rules governing the licencing of gas and electricity suppliers. There is a consultation out at the moment and TGP will be responding to this. Following the consultation, the new rules will be published in April, and Ofgem commented that the objective will be to set higher standards for “customer service and financial resilience”. Higher standards on customer service will impact TGP in the microbusiness sector - we need to continue to treat customers fairly and focus on preventing customer complaints and where we do get a complaint resolving it as soon as possible.

For more information, please head to the UK – Regulation page on Workplace. This is an open, interactive forum and I encourage you to participate with it.