British Gas boss calls for tougher rules to protect consumers from failed energy firms
A raft of energy suppliers have collapsed since the start of 2021 after being unable to cope with soaring energy prices – affecting more than four million customers.
Speaking at Centrica’s AGM in Leeds this week, chair Scott Wheway said the firm wants to see stronger regulation of who can operate in the energy supply sector.
He said: “We are happy to have been able to provide stability and support to millions of customers and the wider sector through the energy crisis.
"This is no small feat given the profound impact the energy crisis has had. Over the past two years, over half of the UK’s energy suppliers have collapsed, impacting over four million customers and costing energy consumers billions.
"Allowing that to happen again would be a mistake.
"We will always play our role as we did when stepped into support over 700,000 customers when their supplier collapsed. But we also have a role in engaging constructively with the regulator Ofgem and the UK Government to drive change.
"We continue to push for full and proper financial services-style prudential regulation, including fit and proper tests and capital adequacy ruleswell-monitored risk management activities and full protection to customers’ deposits.”
In November, Ofgem put forward proposed reforms designed to protect customers and ensure energy suppliers are resilient to market shocks.
It came days after it told 17 British energy suppliers they have to improve how they deal with vulnerable customers, with the watchdog identifying “severe weaknesses” at five firms.
The fresh proposals included introducing capital requirements to ensure suppliers have enough cash to deal with future energy shocks.
It said it would also require suppliers to ring-fence money they need to buy renewable energy and more closely monitor the use of customers’ credit balances to stamp out misuse by firms.
But Centrica said at the time it did not believe the measures went far enough, arguing that customer credit should be ringfenced to prevent suppliers from using consumers’ money for other corporate purposes.
During the AGM this week, one shareholder asked about the costs of Centrica’s recent involvement in a High Court challenge over the sale of collapsed energy firm Bulb to a rival provider.
In March, British Gas, Eon and Scottish Power lost a challenge over the Government’s sale of Bulb to Octopus Energy. It followed Bulb collapsing into administration in November 2021, affecting 1.5 million customers.
British Gas and Eon said following the March verdict they they would consider their next steps in the case and Mr Wheway told the AGM that the legal matter was still ongoing, restricting him on what he could say about the matter.
But he went on to reiterate a wider point about the “unfair” situation where the collapse of a failing energy company results in higher bills for consumers.
He said that is why Centrica wishes to see the system reformed so companies operating in the sector have genuine financial stability.
"In the end when they fail unfortunately it is the customers of the remaining companies that are paying for that failure,” he said.