OFGEM Promises Action Against Suppliers Who Have ‘Failed to Follow the Rules’

Energy regulator Ofgem has written to chancellor Jeremy Hunt promising action against energy firms demanding massive prices increases.

Operators from across the sector earlier this week called on the government to take action against energy firms, as some businesses face 500-600% price increases.

“We have started compliance proceedings against a small proportion of suppliers where we have serious concerns they are not compliant,” Ofgem boss Jonathan Brearley wrote in a letter to Chancellor Jeremy Hunt.

He said that suppliers had on average doubled the security deposits they demanded from gas customers, rising to £68,000 last September from £30,000 earlier.

For electricity customers “the data shows that some customers faced dramatically higher requests for security deposits, especially towards November,” Mr Brearley said.

This coincided with rising energy prices, but regardless “could have had a significant impact on these customers,” Mr Brearley said.

The number of businesses that were forced to pay security deposits also rose last year, doubling to about 800 electricity customers by November.

“Some of the data raises concerns that some suppliers may have breached licence conditions, acted against the intent of the EBRS, and poor behaviour towards customers may not have been effectively constrained by competitive pressure, in the way we would expect,” Mr Brearley said.

In October there was an increase in companies being declined deals with their suppliers, Ofgem found.
Earlier this month tried organisation UKHospitality wrote to Grant Shapps MP, the Secretary of State for Energy Security and Net Zero, highlighting the pressing need for OFGEM to take suppliers to task for their unscrupulous behaviour towards hospitality.

The letter urged the Government to instruct OFGEM to:
• Enforce the renegotiation of contracts signed between July and December 2022, penalty-free, with the support of deposits already taken.
• Enact full regulation of the non-domestic energy market if suppliers are not willing to act.
• Reset security deposits to reflect falling prices and increase business liquidity.
• Introduce a Government-backed trade credit insurance scheme for sectors that suppliers perceive to be high-risk.

Night Time Industries Association chief executive Michael Kill said:
“Businesses across the night-time economy have been struggling to cover the cost of operating, while energy firms have been profiteering at the cost of vulnerable businesses. This letter from Ofgem outlines our ongoing concerns with regard to the conduct of these energy firms. These companies can’t be allowed to get away with this, and must be held accountable by the government and regulator.”