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Energy Supply: Costs

Question for Department for Business, Energy and Industrial Strategy

UIN 35690, tabled on 19 July 2021

To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment (a) his Department and (b) Ofgem has made of the potential disproportionate effect on (i) vulnerable and (ii) less-able-to-pay consumers of the mutualisation of costs from energy supplier failures.

Answered on

27 July 2021

Keeping down bills and protecting vulnerable consumers remains a key focus for Government and Ofgem. For example, the Government’s Warm Home Discount and Energy Company Obligation schemes are focussed on reducing bills for vulnerable households.

When a supplier fails and Ofgem appoints A Supplier of Last Resort (SoLR), they carefully consider the ability of the incoming supplier to effectively serve the new customers, including those in vulnerable circumstances. Very rarely does the appointment of a SoLR involve mutualisation of the costs of onboarding the customers.

Mutualisation of unpaid supplier bills under the Renewables Obligations support scheme, is now less likely to occur. The Government recently restored the link between the threshold at which mutualisation occurs and the annual cost of the scheme, making the threshold much higher. We will also be consulting soon on the wider matter of supplier payment default under the Renewables Obligation, which will consider both regulatory and legislative approaches.