23rd October 2019

The Supplier Licencing Review continues with Ofgem focussing attention on existing suppliers.

The Supplier Licencing Review continues with Ofgem focussing attention on existing suppliers and ensuring that they can remain robust in more challenging market conditions.

Here at Datamere, having been working in the energy industry for the past 20 years, we have seen a lot of companies come and go. Some of those exits have surprised the whole industry, so we are hopeful that these steps can help prevent the Supplier of Last Resort headache for the industry.

The recently launched consultation includes proposals for new financial tests and checks for existing suppliers. Announced on 22 October, the consultation sets out a package of proposals to ensure that all suppliers have effective risk management processes in place, maintain appropriate governance and to allow for Ofgem’s market oversight to be increased.

The proposals include new checks introduced for growing suppliers before they hit certain thresholds of customer numbers, requiring them to ensure they have the operational capability to effectively serve their whole portfolio. If they fail the checks, they could be stopped from taking on further customers until such a time that the regulator is satisfied.

Additionally, Ofgem proposes introducing further ongoing “fit and proper” requirements for suppliers, to ensure those in senior management positions are fit to carry out their duties, and requirements for suppliers to have provisions that protect at least 50% of their customer credit balances in the event of financial failure.

Ofgem have asked for responses to the consultation to be in by 3rd December.

We are very hopeful that these checks can assist suppliers within the industry but without becoming too onerous.

If you would like to review the consultation the full documentation can be found here https://www.ofgem.gov.uk/system/files/docs/2019/10/slr_policy_consultation_new_updated.pdf