Uk News Households face an extra £94 on energy bills to pay for collapsed suppliers, watchdog warns United Kingdom news
PremierLeague-News.Com - National Audit Office blasts Ofgem, as cost to taxpayers of dozens of energy suppliers going bust over the past year is estimated at £2.7bn
PremierLeague-News.Com - Breaking Sport Transfer News ! Every household in Britain will see an extra £94 added to their energy bills to cover the estimated £2.7bn cost of dozens of energy suppliers going bust over the past year, the public spending watchdog has warned.In a new report, the National Audit Office (NAO) has accused Ofgem, the energy regulator, of allowing the development of a market that was “vulnerable to large-scale shocks”, leaving consumers “to pick up the costs” in the event of failure.Ofgem did so by allowing many suppliers “with weak financial resilience” to enter the energy market and by “failing to imagine a scenario in which there could be sustained volatility in energy prices”, the NAO report says.Failings in Ofgem’s approach to licensing and monitoring of new suppliers “increased the risk and cost of supplier failure”, which is now estimated at £2.7bn, it concluded.The bill includes the cost of transferring customers of failed energy suppliers to new companies, as well as missed payments by failed suppliers into government schemes to support renewable generation.The NAO report said: “Ofgem could not have prevented the increase in wholesale prices in 2021 from significantly affecting consumers, but it did not do enough in the years that preceded it to ensure the energy supplier sector was resilient to external shocks.“By allowing many suppliers to enter the market and operate with weak financial resilience, and by failing to imagine a scenario in which there could be sustained volatility in energy prices, it allowed a market to develop that was vulnerable to large-scale shocks and where the risk largely rested with consumers, who would pick up the costs in the event of failure.”A total of 28 small and medium energy suppliers have gone bust since the start of 2021. The suppliers struggled because, despite a massive spike in the cost of wholesale gas, they were unable to hike prices to customers due to the Government’s energy price cap.More from BillsWhy interest rates rise with inflation, and how Bank of England aims to ease price rises22 June, 2022Inflation has hit 9% but it is going to get even worse for household bills22 June, 2022How households can save money and avoid wasting £170 a year on unused subscriptions21 June, 2022The cap was launched in 2019 by regulator Ofgem, as a way of keeping down the cost for households. It is reviewed twice a year to reflect the cost to companies of supplying electricity and gas.
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.It is expected to reach just under £3,000 a year in October, according to recent analysis.Ofgem said it “accepts the findings” which it says align with its own conclusions. An Ofgem spokesperson said: “While the once-in-a-generation global energy price shock would have resulted in market exits under any regulatory framework, we’ve already been clear that suppliers and Ofgem’s financial resilience regime were not robust enough. This contributed to a significant number of failures since August 2021.“We welcome the NAO’s recognition that Ofgem began tightening the rules in 2018 and has continued to do so through to 2022.“Our announcement this week continues this process, with protection of customer credit balances and tough new measures to improve the financial health of energy suppliers.“While no regulator can, or should, guarantee companies will not fail in the future, we will continue to take a whole-market approach to further strengthen the regulatory regime, ensuring a fair and robust market for consumers which keeps costs fair as we move away from fossils fuels and towards affordable, green, home-grown energy.”On top of the £2.7bn, the Government is using taxpayer cash to support green energy supplier Bulb, which collapsed last November.Bulb, which has 1.6m customers and is the largest supplier to have failed, is in a special administration funded by the Government.In the current financial year, the Government has already spent £900 million for the administration, and expects to pay another £1billion in the next.
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