Collapse of energy firms could cost households £164 each
Image credit: Dreamstime
UK energy customers will have to pay roughly £164 each to foot the bill for supply company failures, including the administration costs for Bulb which had around 1.6 million customers.
The charity Citizens Advice said the total bill for the broad collapse of energy firms in the wake of soaring oil and gas prices stands at about £4.6bn nationally.
Some customers were also found to have missed out on credit refunds, as well as struggling to fix inaccurate bills in the process of switching to a new provider.
While smaller energy firms that collapsed typically entered into administration and had their customers moved to a new provider, Bulb’s sizable customer base meant it was too big for the government to allow it to go through the normal process that suppliers entered.
The taxpayer bailout was the biggest since Royal Bank of Scotland, Lloyds Banking Group and Halifax Bank of Scotland in the 2008 financial crisis.
The charity called on the government to “urgently review” how different outcomes of the sale of Bulb may affect customers, to prevent bills from spiralling out of control.
Last month, UK energy regulator Ofgem announced plans to prevent future waves of supplier failures in the wake of volatile energy prices, and to better protect consumers’ money when companies collapse.
From January this year, energy suppliers began undergoing financial stress testing in order to ensure they could continue to operate in tough market conditions.
With just 12 weeks before the start of the winter period for energy bills, which lasts from October to March, Citizens Advice called for more action to be taken to ensure that the costs of regulatory failures of the past don’t add to the high burden that households already face.
Dame Clare Moriarty, chief executive of Citizens Advice, said: “More than half a year since the energy market went into freefall, the bill for supplier failures is still mounting.
“On top of this, we’ve found that too often people are pushed from pillar to post when their supplier fails - adding to their stress and worry at an already difficult time.
“An overhaul is needed before winter piles more pressure on suppliers and customers. The government must improve the supplier failure process and ensure people who’re struggling aren’t chased for debts or left in limbo when they’re waiting for a refund.”
Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.