British Gas owner Centrica has expressed “profound concern” over the financial resilience of some of its competitors in the domestic energy market and has written to Citizens Advice to ask for support in its efforts to protect consumers.
Centrica’s group general counsel, Raj Roy, has written to the charity’s chief, Dame Clare Moriarty, to voice concerns over the regulator Ofgem’s recent consultation on the financial health of energy suppliers.
Centrica wants Citizens Advice to add its weight to calls to disclose whether a customer’s credit balance is fully protected on their bill from a supplier going bust, and hopes planned minimum capital requirements can be introduced more quickly.
Ofgem is attempting to prevent a repeat of the circumstances that resulted in nearly 30 suppliers collapsing over the past two years at a cost of £2.7bn to taxpayers, plus billions more to cover the bailout of the biggest casualty, Bulb.
Centrica reacted angrily in November when Ofgem stopped short of ordering suppliers to ringfence customer credit balances to prevent suppliers from using consumers’ money for other corporate purposes.
Ofgem has previously said some energy firms use customers’ credit balances “like an interest-free company credit card” and it plans to introduce powers to require individual suppliers to ringfence their customer credit balances should they not be compliant with its financial resilience rules.
In the letter, seen by the Guardian, Roy asks Moriaty for her view on an idea proposed by Centrica to Ofgem to introduce an obligation on all suppliers requiring them to disclose to their customers prominently in all communications whether their credit balances would be fully protected if they went bust.
“Whilst this approach cannot be an effective substitute for the robust protection of customer credit balances, it would, at the very least, make suppliers properly accountable to their customers over the use of their deposits and provide all customers with an informed choice when selecting their energy supplier,” he wrote.
Centrica’s chief executive, Chris O’Shea, has warned that more energy suppliers could go bust this winter – with million of pounds of taxpayer cash on their balance sheets.
Under the energy price guarantee, introduced by Liz Truss, energy suppliers are handed government money upfront to cover the difference between wholesale energy costs and the guarantee, risking failure while they hold state funds.
Centrica has taken on hundreds of thousands of customers from suppliers that have collapsed during the energy crisis through the “supplier of last resort” process.
Ofgem has also proposed to introduce minimum capital requirements to ensure suppliers have a strong balance sheet and are not overly exposed to volatile wholesale energy prices.
The new target is for domestic suppliers to have £110 to £220 per customer of net assets by March 2025. However, Centrica wants these requirements brought in quicker than the proposed April 2025 date.
Roy said: “We do not find Ofgem’s argument that suppliers will take this long to secure the necessary finances compelling and have not seen any evidence to support this. Combined with a failure to act on credit balances, consumers would be left unprotected for an extended period of time.”
Citizens Advice declined to comment on the letter and said it intended to respond to Centrica directly. It has previously expressed concerns over the decision to “water down requirements on suppliers to protect consumer credit balances”.