Ofgem should ‘stress test’ new suppliers, says Green Energy

Green Energy has called on the regulator to “stress test” new suppliers to ensure they are capable of providing utility services and avoid them making “eye-watering losses”.

The comments from Green Energy’s chief executive Doug Stewart are in response to Ofgem’s consultation to protect consumer’s credit balance if their supplier becomes insolvent.

In the letter to Ofgem Stewart said: “I also believe that Ofgem should “stress test” energy suppliers (as the Bank of England does with our banks) to ensure that people offering utility services are capable of providing them and are proper and fit people to do so.

“The scenario in energy where almost anyone now can enter the industry, use consumer money as working capital and make eye-watering losses while holding customer money is, in my view, a derogation of duty.”

The regulator is considering on a case by case basis which supplier is best placed to reimburse the credit balances of customers when their energy suppllier fails.

This cost will be spread across all energy customer’s bills, but Stewart adds: “Why should consumers’ bills go up to support entrants who play fast and loose with customer money?

The proposals have faced criticism from industry stakeholders who suggest that the potential measures and quick consultation suggest suppliers are struggling. Stewart agrees, asking at the end of his letter “does this mean someone is about to fall?”

Green Energy will be formally responding to the consultation which is due to close on 29 July 2016.