Ofgem offers suppliers pathway to recouping costs after taking on new customers
Energy firms that rescued stranded customers from fallen suppliers since September can now submit claims for costs they have suffered as a consequence.
Market regulator Ofgem has announced that claims can be made up until Monday 6 December.
This confirms temporary changes set out by Ofgem in late October to the Supplier of Last Resort Process (SoLR).
Ofgem said: “We are making these changes as we recognise that the current market conditions are extremely challenging. We want to work collaboratively with suppliers and the wider industry to ensure that the SoLR process can continue to protect consumers.”
So far, over two million customers across the UK in the past three months have been shifted from one of the 24 collapsed suppliers to another energy firm by Ofgem as part of the SoLR process.
This process typically incurs heavy costs from firms, banking on increased profits when the market recovers due to an expanded customer base but suffering heavy losses simply from onboarding consumers.
The energy price cap is currently set at £1,277 per year, which limits the ability of firms to pass on charges to consumers amid a five-fold annual rise in wholesale prices.
Ofgem has an ongoing consultation on the price cap, amid growing pressure from industry bosses such as ScottishPower’s CEO and Utilita Energy’s founder to review the mechanism.
Its CEO told the House of Lords that it is also looking to bring in capital controls and hedging limits to prevent suppliers being over-exposed to market shocks.
Some challenger firms failed to buy gas more than 3-6 months in advance, in a market focused on switching consumers and low prices.