Energy consumers face £172m bill for collapse of 11 suppliers

Warnings that 32,000 households may be targeted by debt collectors

Energy consumers will be forced to foot a £172m bill to cover the cost of the collapse of 11 energy suppliers since the start of last year.

Citizens Advice said almost 30 million households will need to bail out the bust energy suppliers through their bills, while 32,000 may also be targeted aggressively by debt collectors hired by their administrators.

The charity said it has helped more than a thousand consumers left “distressed and anxious” by the collapse of their supplier because administrators are not bound by the same consumer protection laws as typical collection agencies.

Gillian Guy, the chief executive of Citizens Advice, said: “Consumers shouldn’t have to foot the multimillion pound bill left behind when companies collapse – and they certainly shouldn’t lose their usual protections in the process.”

Citizens Advice has called on the government to close the gap between the protections offered to customers of live energy suppliers and those who have gone bust. It has also urged Ofgem to limit the cost of future supplier failures.

“It must act now,” Guy said.

Ofgem has overseen the spiralling multimillion pound hit for bill payers by spreading the unpaid cost of renewable energy and grid upgrades across the energy market when a supplier goes under.

Under its “safety net” procedure it hands the customers of a failed energy company to another supplier before reclaiming the unpaid costs via energy bills.

Energy UK, the industry’s trade group, said the regulator was forced to use this process “more than ever expected” after lowering the minimum standards for new energy suppliers to encourage more competition for the big six incumbent suppliers.

Ofgem said earlier this year that it plans to stress test prospective energy suppliers to make sure they are financially fit to provide an essential service before granting them a supply licence.

“The increase in competition and the number of suppliers in recent years have been great for customers in providing choice and driving down prices,” Energy UK said.

“But we welcome Ofgem bringing in tougher checks for suppliers entering and operating in the market to ensure they have sustainable business models and are adequately financed to serve their customers.”


Contributor

Jillian Ambrose

The GuardianTramp

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