The energy regulator Ofgem plan to improve the financial health of energy suppliers to ensure they can deal with future shocks in the energy market. This plan is coming into place as the energy systems in the UK seen 28 suppliers fail last year.
This has caused a massive hike in prices due to the cost of moving energy consumers over to another supplier. This led to many suppliers having to buy extra gas at a short notice, also due to the domestic price cap they were having to sell this gas at a cheaper price than they were buying it for.
Therefore, Ofgem plan to make these changes to prevent any more supply failures:
· Protecting credit balances and green levies for customers. This means if any failures do happen with the energy supplier that the cost won’t be picked up by consumers.
· Improving the financial health of suppliers. This will ensure they can cope with the current market and reduce failures.
· Tightening the rules on how much direct debt suppliers can charge customers, tis will ensure that credit balances do not become excessive.
· Set plans for suppliers to have better control over key assets they need to run their business supply.
By ensuring suppliers are running stabilized and well financed companies, we should not see the same catastrophes in the energy market that we did last year. Also ensuring all customers are better protected by their energy suppliers.