LONDON (Reuters) - Britain’s energy regulator will from July 5 implement new tighter rules for suppliers entering the market, it said on Thursday, following the collapse of several small firms over the past few years.
Three small energy companies ceased trading this year while several collapsed in 2018, leading to questions over the viability of some of Britain’s 50 or so independent energy suppliers which have taken market share from the “big six” companies over the past few years.
Under the new rules, suppliers will need to lay out plans on how they expect to meet customer service obligations and will also have to undergo an assessment by regulator Ofgem to establish they are fit to enter the market.
“The new requirements will help us to weed out those that are underprepared, under-resourced and unfit to hold a licence. This will help reduce the risk of supplier failure and help drive up standards for consumers,” said Mary Starks, executive director of consumers and markets at Ofgem.
A report by charity Citizen’s Advice last month estimated that customers had to pay an extra 172 million pounds ($216 million) to cover unpaid costs relating to the collapse of 10 energy firms since January 2018.
Doug Stewart, chief executive of small supplier Green Energy UK, said the new rules did not go far enough, and Ofgem should stop companies from taking upfront payments from customers.
“I remain concerned that suppliers’ use of credit balances is a ticking time-bomb,” he said, estimating that UK energy credit balances are in excess of 800 million pounds.
Reporting By Susanna Twidale; editing by Emelia Sithole-Matarise