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British energy firms to get $3.2 billion for taking on customers of failed rivals -Ofgem

British energy firms to get $3.2 billion for taking on customers of failed rivals -Ofgem
British energy firms to get $3.2 billion for taking on customers of failed rivals -Ofgem   -   Copyright  Thomson Reuters 2022
By Reuters

By Nina Chestney

LONDON – British energy suppliers could receive up to 2.4 billion pounds ($3.2 billion) for taking on customers of firms which have collapsed since last year, market regulator Ofgem said.

Ofgem made the estimate in written evidence to the British parliament’s Business, Energy and Industrial Strategy Committee, which is investigating energy pricing and the future of the country’s energy market in the wake of recent failings.

The regulator said energy suppliers which were chosen to take on customers from firms which failed are expected to claim “approximately 2.2 billion to 2.4 billion pounds” from Ofgem.

This will later be recovered by billing all British energy consumers, who are already facing huge rises in their bills.

A spike in wholesale gas and power prices since the start of last year has also resulted in more than 30 energy companies going bust in Britain, leaving their customers in the lurch.

Ofgem can transfer customers of collapsed suppliers to other firms under a system called the supplier of last resort.

Ofgem said that about 85% of the overall costs those providers have incurred under the system were from having to buy wholesale energy supplies for their new customers, which have kept rising since Russia’s invasion of Ukraine.

Finance minister Rishi Sunak will aim to show on Wednesday that he is helping Britons through the worst cost-of-living squeeze in decades while keeping his powder dry for tax cuts before the next election.

Sunak is due to give a budget update at around 1230 GMT and he will add to the support he gave households only last month, since when energy prices have risen even higher.

($1 = 0.7562 pounds)