LONDON, June 25 (Reuters) - Britain’s energy regulator Ofgem plans to increase financial checks on energy suppliers to reduce the risk of them collapsing, it said on Thursday.
Several small energy companies have gone bust over the past two years, as a price cap on the most commonly used tariffs and fluctuating wholesale prices have impacted their profits.
The casualties among the smaller companies prompted questions over the viability of some of Britain’s 50 or so independent energy suppliers which have taken market share from larger companies over the past few years.
“These proposals will drive up suppliers’ customer service standards ... whilst reducing the risk and costs to consumers associated with supplier failure,” Mary Starks, executive director of consumers and markets at Ofgem said in a statement.
Smaller suppliers which are taking on more customers will need to prove they have sufficient finances to meet obligations and Ofgem said it could act to ensure they do not take on even higher numbers.
Ofgem last year had already set out tougher rules for new entrants to the market and said the latest measures would help to improve standards at existing suppliers.
The rules are set to come into force this winter Ofgem said, with a consultation open until August 20. (Reporting By Susanna Twidale. Editing by Jane Merriman)