Energy buyers must 'fight through credit mud pool'

11 August 2009

12 August 2009 | Jake Kanter

Buyers continue to face "stifled" competition and increased costs in the energy market, energy experts have warned.

Bobby Collinson (pictured), managing director of UK company Power Efficiency - a consultancy that manages £500 million of energy spend on behalf of clients - said access to credit insurance has become increasingly difficult for businesses this year.

As a result, energy suppliers are refusing to bid on contracts or are asking for advanced payments, and the cost of gas and electricity is rising substantially.

The Major Energy Users' Council (MEUC) argues it is the "trickiest problem" in the industry since privatisation 20 years ago. "The current situation is clearly untenable for customers. Moreover the problem has been getting worse by the day," said Andrew Buckley, director at the MEUC.

The warning follows SM's report last year that found energy vendors were dramatically increasing the stringency of credit checks for fear of customers defaulting on payments (News, 30 October 2008).

Collinson told supplymanagement.com this week: "In November last year Alistair Buchanan the CEO of Ofgem said this would be the 'kick in the stomach for competition in the energy market'. Eight or nine months on, the situation is worse and I don't see a clear solution."

Collinson urged buyers to share information about their organisations' successes and portray the business in the best possible light when talking to suppliers. "You have to literally fight your way through the credit mud pool," he added.

Energy suppliers, the MEUC and members of the government will meet with Ofgem on Friday to discuss the problem of credit insurance in an effort to find a solution.

SMaug2009

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