Ofgem warns utility vendors over bid refusals

24 August 2009

25 August 2009

UK energy regulator Ofgem could investigate utility vendors who are refusing to bid on contracts because of credit problems in the energy market.

Many firms are finding it increasingly difficult to access credit insurance prompting some suppliers to ask for advanced payments or refuse to even bid for deals. Energy buyers months ago warned this was already reducing competition and significantly pushing up costs (News, 30 October 2008).

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

Utility suppliers, the MEUC and members of the government met with Ofgem this month to discuss the problem of credit insurance.

In a statement last week, the regulator said: "Suppliers and customers need to be proactive and flexible about how to address this [problem] when customers come to negotiate new contracts. We have made it clear to suppliers that if this voluntary approach isn't successful the option remains for us to launch an investigation, or refer the issue to the Competition Commission."

Brian Rickerby, joint MD of energy purchasing firm energyTeam, welcomed the warning. He told SM the issue was creating a "real headache" and Ofgem must introduce regulations to stop suppliers rejecting contracts out of hand.

SMaug2009

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