Energy customers face £94 rise in bills due to Ofgem’s ‘catalog of errors’, says Citizens Advice

Households are facing rising bills by up to £94 after the energy regulator gave ‘wrong excuses’, according to a damning report by Citizens Advice.

The charity says Ofgem has failed to fend off unsuitable energy suppliers for nearly a decade, leaving consumers in a tailspin as wholesale prices and suppliers spike. Out.

About 26 energy suppliers have been active this year


About 26 energy suppliers have been active this yearCredit: Getty

The record price increase to date has resulted in collapse of 26 energy suppliers, affects 4 million customers – and costs an average household around £94, the latest figures show.

Dan Tri said the energy regulator’s mistakes and missed opportunities have left the market in a “precarious” situation when Gasoline prices soar in 2021.

It said the market had been vulnerable to a spike in wholesale prices this year because of its setbacks.

The charity alleges multiple instances in which Ofgem failed to act on evidence of rule violations and scaled back enforcement even as concerns grew.

Ofgem’s enforcement powers were “unused” as the supplier’s behavior worsened, with the regulator only opening a formal investigation into customer service as it declined. in the three years before the crisis.

It hasn’t been able to stop a vendor from taking on new customers regarding customer service concerns since February 2019.

The report said “flaws” in the regulation had led to a culture of non-compliance, with slow or omitted action in response to evidence of license violations and on issues including correct payment, access phone lines to customers and offer prepayment options, the report said.

Advice for citizens said it had raised repeated concerns about inefficiencies and financial viability as new suppliers entered the market between 2010 and 2019 and called for a formal review of the scheme. Licensed in early 2013.

However, no review took place until 2018, with Ofgem only tightening regulations for new entrants in 2019 after 11 supplier failures.

The charity described the underperformance as “pervasive”, with many companies presenting clear evidence of financial unsustainability, including those running out of living rooms and owners’ kitchens. own.

Poor practice

Dan Tri says there has long been evidence of financial weakness in the sector before this year’s crisis, with some suppliers relying on customer credit balances for working capital. .

Ofgem’s own analysis found that suppliers held a total of £1.4 billion in surplus credit in 2018.

Analysis found some consumer balances were “excessive”, with some customers reporting to Citizens Advice that their energy supplier was holding more than £1,000 of their money.

According to Ofgem, the average bill payer only needs £150 of credit to cover typical winter usage.

The charity is calling for an independent review of the causes of the market crash, including Ofgem’s approach to compliance and enforcement, as well as its reforms to make sure companies are suitable for trading.

It also wants a new “consumer obligation”, making companies accountable for the outcomes their customers experience, while also taking action by the Government and Ofgem to protect consumers from unnecessarily inflated bills for supplier defects.

An Ofgem spokesperson said: “Ofgem’s top priority is protecting energy consumers. However, we accept that the energy market needs reform and fast – the current system is not designed for this type of extreme market event. ”

Over the next few weeks, the regulator will announce changes that will “demonstrate how seriously we are addressing the pace of change needed”.

Reform is needed

“Energy customers are faced with multi-billion pound bill, in large part because Ofgem has missed many opportunities to regulate the market and tackle rule-breaking by suppliers.

“Recent wholesale price increases would be difficult to handle under any circumstances, but they will not necessarily lead to the downfall of a third of the companies in the market.

“It’s clear now that reform is needed – and this is not just about avoiding another crisis.

“If consumers lack confidence in the energy market or feel they are getting a bad deal, it will be even harder to convert to net zero. So reform is essential for the future. as well as to avoid the mistakes of the past.”

Millions of households have seen bankrupt energy supplier in recent months.

As a result, many people have seen their bills increase dramatically, with increased wholesale prices meaning very few good deals have been made.

Consumers are being reassured that they won’t lose their energy supply if their supplier goes down.

However, there is little consolation when prices rise, with Wholesale costs are hard to reduce off until at least spring.

NS energy price limit, increased in October, potentially increase again in the spring, add more to the household bill.

And it is predicted that more suppliers may leave the market at the end of the year.

Martin Lewis reveals how households will pay 40% more on higher energy bills next year

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Bobby Allyn

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