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Energy Supply: Costs

Question for Department for Business, Energy and Industrial Strategy

UIN 35691, tabled on 19 July 2021

To ask the Secretary of State for Business, Energy and Industrial Strategy, what recent steps (a) his Department and (b) Ofgem has taken to avoid the risk of mutualisation of the cost of customer credit balances in the event of energy supplier failure.

Answered on

27 July 2021

Ofgem have strengthened checks at market entry to ensure that suppliers understand their obligations and have the appropriate arrangements in place to operate in the retail energy market (introduced from July 2019).

In January this year Ofgem introduced a suite of new rules to ensure that suppliers act in a financially responsible manner and do not take actions that may result in their competitors and consumers facing increased costs should they fail. Ofgem are currently consulting on further measures that would require suppliers to automatically refund customers’ credit balances every year, and protect any amounts they hold above a certain threshold.