Ofgem takes action against suppliers which have ‘failed to follow the rules’

Ofgem has started proceedings against a number of business energy suppliers as it found that more than half have work to do to show they are following the rules.

The energy regulator said it had examined whether suppliers were living up to their duties under the Government’s energy support scheme for businesses.

It said that 58% “require further evidence to assure compliance” with Ofgem’s role in monitoring the Energy Bill Relief Scheme’s rules.

“We have started compliance proceedings against a small proportion of suppliers where we have serious concerns they are not compliant,” Ofgem boss Jonathan Brearley wrote in a letter to Chancellor Jeremy Hunt.

He said that suppliers had on average doubled the security deposits they demanded from gas customers, rising to £68,000 last September from £30,000 earlier.

For electricity customers “the data shows that some customers faced dramatically higher requests for security deposits, especially towards November,” Mr Brearley said.

This coincided with rising energy prices, but regardless “could have had a significant impact on these customers,” Mr Brearley said.

The number of businesses that were forced to pay security deposits also rose last year, doubling to about 800 electricity customers by November.

“Some of the data raises concerns that some suppliers may have breached licence conditions, acted against the intent of the EBRS, and poor behaviour towards customers may not have been effectively constrained by competitive pressure, in the way we would expect,” Mr Brearley said.

In October there was a jump in companies being declined deals with their suppliers, Ofgem found.

The regulator is still investigating issues in the non-domestic supply market and plans to publish a full report this summer, including recommendations on what it can do to fix potential problems.