LONDON (Reuters) - Britain’s energy market regulator Ofgem said on Thursday it will introduce new, stricter tests for energy suppliers entering the market from June after several firms collapsed.
Ofgem said that companies which apply for a licence to supply energy will have to undergo tougher tests to help improve standards for customers and reduce the risk of supplier failure.
Applicants for a licence will have to show they can fund their operations properly for the first year; how they expect to comply with regulatory obligations and how they expect to provide a proper level of customer service, it added.
The regulator said it will consult in the summer on new proposals to raise standards of existing suppliers and review arrangements for suppliers exiting the market.
Three small energy companies have ceased trading this year while several also 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.
“Applying new requirements on suppliers entering and operating in the market will aid us to weed out those that are underprepared, under-resourced and unfit,” Mary Starks, executive director of consumers and markets at Ofgem, said in a statement.
“This will help minimise the risk of supplier failure and help drive up standards for consumers,” she added.
Reporting by Nina Chestney and Susanna Twidale; Editing by Kirsten Donovan