MSE News: GB Energy goes bust, 160,000 customers affected

ciber

From the previously posted Ofgem link:

Should I cancel my direct debit?

No, you don't need to worry about cancelling your direct debit:

If you are in credit - your old supplier won't take any direct debit payments from you.

I'm questioning how true that is, as I'm £150 in credit and had a DD payment taken yesterday from GB. They also emailed me today asking for a meter reading, but haven't had anything from them about them stopping trading.

matchit

I find myself in the situation of having switched from GB to B.Gas about 5 weeks ago; therefore not now a customer of GB. My account was in credit by about £150. Tried numerous ways to contact them, on hold for a total of about 5 hours (did immediately speak to a member of their sales team when I pressed a different option, this was last week - perhaps that is another story!!!) and I tried the email option without success. I followed lead of other posters on here and called my bank last night. They have refunded my last two direct debit payments (September and October). Point to note though is that the person on the phone did say they then request the money from GB and if that is not successful then they can take the refund back. I know I am correct so hopefully all will be well.

fredandwilma

http://www.telegraph.co.uk/business/2016/11/28/gb-energy-customers-owed-24m-supplier-went-bust/

But Luke Watson, says their net position is they owe customers £5m. Can you have a net position when you have ceased trading?

By Emily Gosden, energy editor
28 NOVEMBER 2016 • 8:43PM

GB Energy Supply's customers are owed about £24m in credit balances after the supplier went bust.

All UK households could be asked to pick up the cost of refunding the money unless another supplier agrees to acquire GB's 160,000 customers and honour their credit balances in full.

GB Energy Supply ceased trading on Saturday, blaming rising wholesale energy costs that it said meant "the business has become untenable".


The supplier, which had a turnover of just £22m in 2015, has grown rapidly after offering cut-price deals that were often among the cheapest in the market.

Energy regulator Ofgem is currently seeking an established supplier willing to voluntarily acquire GB's customers and honour their credit balances, which came to about £24m at the time it went bust.

Several industry sources said this appeared an expensive price to pay for the customers, given there were no guarantees that they would not simply switch elsewhere.

Under Ofgem rules confirmed last month, if no supplier is willing to honour the balances, the costs can be spread across all UK customers using an industry levy. This would equate to a charge close to £1 for every household.

The regulator is understood to be optimistic of finding a supplier who is willing to honour the balances and hopes to announce a deal within days.

Luke Watson, managing director of GB Energy, confirmed that customers' credit balances were about £24m.

However, he said that these same customers had unbilled usage of £14m, meaning the total amount owed to these customers was actually nearer £10m.

Other customers owed GB Energy a total of £5m "therefore our net position is that we owe customers £5m", he said.

"This can be attributed to taking direct debits in advance and would have actually worked its down throughout the winter months when usage is obviously higher."

Confirming the new rules last month, Ofgem said: "Ofgem will now take into account who can best protect consumers’ credit balances as part of the process for selecting a replacement supplier.

"Where necessary, Ofgem would allow the replacement supplier to recoup the cost of reimbursing the credit balances through an industry levy. This levy, which would be spread across all energy customers, would only have a small impact on bills."

System

Quote: Energy regulator Ofgem is currently seeking an established supplier willing to voluntarily acquire GB's customers and honour their credit balances, which came to about £24m at the time it went bust.

Several industry sources said this appeared an expensive price to pay for the customers, given there were no guarantees that they would not simply switch elsewhere.

Under Ofgem rules confirmed last month, if no supplier is willing to honour the balances, the costs can be spread across all UK customers using an industry levy. This would equate to a charge close to £1 for every household.

The regulator is understood to be optimistic of finding a supplier who is willing to honour the balances and hopes to announce a deal within days. Unquote

There is more hope than expectation in the above words. Asking a supplier to take on 160,000 customers whilst at the same time promoting switching to the cheapest deals on the market is something of a contradiction. It really is time that Ofgem stepped up to the mark and adopted a pragmatic approach to consumer credit protection; e.g.; ATOL bonding. This would stop 'a man with a computer' getting a supply licence because Ofgem thinks it is good for competition.

It is somewhat ironic that by flooding the market with new suppliers, Ofgem's actions may end up having the reverse effect by driving customers back to the security of the established Big 6. This will add to the Perfect Storm that small suppliers now face ( the fall in the £ versus the $, and rising wholesale prices due to supply shortages in Europe because the French have turned off a number of their nuclear power stations for urgent safety checks).

petezx9

ciber wrote: »

From the previously posted Ofgem link:


I'm questioning how true that is, as I'm £150 in credit and had a DD payment taken yesterday from GB. They also emailed me today asking for a meter reading, but haven't had anything from them about them stopping trading.

Thinking back to my LloydsTSB IT days, your direct debit would have been sent by GB Energy to your bank on the Friday evening (probably) and processed by them over the weekend for applying to your account overnight Sunday/Monday. So it appears that GBE took a payment Monday but in reality the process for that would have been initiated prior to them announcing their demise.

lstar337

Hengus wrote: »

Under Ofgem rules confirmed last month, if no supplier is willing to honour the balances, the costs can be spread across all UK customers using an industry levy. This would equate to a charge close to £1 for every household.

Ooh yay! I can't wait to pay for GB Energy's mistakes, even though my wages only just cover my own bills!

antrobus

fredandwilma wrote: »

...But Luke Watson, says their net position is they owe customers £5m. Can you have a net position when you have ceased trading?

Yes.

Why would it be otherwise?

System

lstar337 wrote: »

Ooh yay! I can't wait to pay for GB Energy's mistakes, even though my wages only just cover my own bills!

This is what was reported in Utility Week dated 11th November (prescient or what):

Speaking at Energy UK’s annual conference, Cornwall Energy associate Peter Atherton said that the number of suppliers could fall from more than 50 to as few as 15, as a result of rising wholesale prices and other costs.

“We are back into a price rising world with commodity prices and with an increase in renewable subsidies,” he said. “It is also going to lead to a shake out of suppliers. We’ve got about 50 independent suppliers but there are not enough people in the country to man 50 suppliers.”

Atherton said that as a result of the explosion in the number of suppliers “a lot of these independent suppliers are undercapitalised financially but also from a human capital perspective” and in a rising price world may be forced to close down.

“A period of sharp wholesale rises will result in a very useful shakeout. How many should we have? Maybe 15 to 20 companies, certainly not 50 plus.”

Speaking to Utility Week, Energy UK chief executive Lawrence Slade said that if smaller suppliers were forced to close over the winter “it comes under the heading of it’s a competitive market”.

He added: “When you’ve got 40 plus suppliers, you have potentially got 40 different purchasing models. You’re right to point to the current volatility of the market we’re seeing.
“However, these costs affect everyone. There aren’t just six or eight players in the market, there are dozens and all responding in different ways as should happen in a market.”

Robin9

How much does GBE owe their suppliers ?

lstar337

It's fine to have plenty of small suppliers, if they don't hold on to their customers cash!

Most of these suppliers seem to be run in a way which almost forces a build up of a large credit balance. A credit balance which customers are either going to lose, or is going to be paid by everyone else.

Allowing suppliers to purposely build up these large credit balances is irresponsible.

The big 6 must be laughing now with people scrabbling for the security offered by a large supplier.