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Ofgem has come under fire for its proposal to only “closely” monitor how energy suppliers use their customers’ credit balances.
This is part of a package of market reforms proposed by the energy regulator to minimise the risk and the cost of energy supplier collapses.
Ofgem said: “If they (energy suppliers) are found to be reckless, further action will be taken via Ofgem’s Enhanced Financial Responsibility Principle.”
The regulator has dropped a plan to ringfence customers’ credit balances – Centrica Chief Executive Chris O’Shea slammed the energy regulator’s decision and accused it of an “abdication of responsibility”.
Mr O’Shea said: “When customers pay upfront for their energy, they are trusting their supplier to look after their hard-earned money.
“They would be appalled to learn their money was being used to fund day-to-day business activities but that’s exactly what’s happening in some companies and it undermines confidence in the market.
“If and when a large supplier fails, the recklessness of the decision not to address this issue will be clear for all to see.”
Commenting on Ofgem’s proposals, its Chief Executive Jonathan Brearley said: “This is a delicate balance and while Ofgem want well-capitalised businesses that can weather price fluctuations, we also don’t want to block the market for new suppliers or force suppliers to sit on lots of capital they could be investing in innovative ideas.”