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

OneLeggedPig

Poundnote wrote: »

Take note an offer you can not refuse:-
Have done a comparison between GBE Fixed 12 Crystal and Co-Operative Energy Fix & Fly result Co-op is 39% more expensive.

Co Op have said they will match all previously agreed fix prices until the end of that contract.

System

Chris75 wrote: »

Well done Ofgen
Well done Co-op
Thank you to both

What is not as obvious is that there is a cost to this which will have to be picked up somewhere. It will either be passed on to all electricity customers -all of us- or result in lower profits for all electricity companies which will affect shareholders including pension funds etc.

It is predicted that other small suppliers may well fail in a rising price market.

Lesson to learn: We need some sort of financial health check on companies wanting to set up as energy suppliers or in any of the other industries with official regulators. We have the regulators because the services are regarded as vital so lets treat them that way.

This is a 'lose lose' situation for the domestic energy sector and its customers and Ofgem has nothing to be proud about.

The suppliers who bid for SoLR had Ofgem over a barrel (no pun intended). Why - because every one of GBEnergy's customers was a switcher - not 30% but 100%. Imho, none of the bidders for the SoLR would have accepted an arrangement with a Deemed Contract as they knew it would be a lot of hassle for little gain; ex GBEnergy's customers would just have drifted away. My guess then is that Ofgem has covered the cost of running existing contracts through to termination, and all credit balances, with an industry levy - a levy that every energy customer will pay. Remember, how happy we all were when we got a £10 electricity rebate a couple of years ago. Would you be happy to pay an extra £10 a year to cover future supplier failures? In my view, Ofgem urgently needs to set up a scheme similar to the ATOL bond that new airline entrants have to pay BEFORE they are awarded an airline operating licence.

Energy experts now calculate that more of the smaller suppliers will fail because of increased wholesale prices that will hit us early next year which are compounded by the fall in the £ against the US$. The Ofgem insolvency template is now fixed: future insolvencies will have to be handled in exactly the same way as that of GBEnergy. Consumers will demand nothing less.

If you recall, when the Banks failed in 2008, no one said 'it's one of those things'. The failures were put down to a lack of Regulator oversight and regulation. Rather than praise Ofgem, we should be asking 'what do you intend to do to stop future failures'? Remember, a supplier failure was an event that Ofgem saw as being unlikely as recently as last month.

It is interesting to read that more and more of the established suppliers are demanding enhanced new supplier financial checks. One industry expert has even predicted a fall in supplier numbers from 50 down to 15 ( I hope he is wrong for all our sakes). Entrants with less than a year in the market are seen as being at greatest risk.

http://www.bbc.co.uk/news/business-38138584

From Utility Week - Jun 16

Independent supplier Green Energy said the proposals( the Ofgem levy) highlight a “real risk” in the retail energy market that suppliers are offering savings that aren’t sustainable, despite Ofgem insisting that supplier failures are unlikely.

The firm’s chief executive Doug Stewart said: “Established energy companies bill their customers in arrears, new entrants, by and large, take cash up front to use in their business which means consumers never see the benefit of the so called £200-£300 savings.

“Ofgem speaks about restoring trust in the energy market: they are right but this proposal isn’t a solution. It simply masks an unwelcome and unnecessary risk that doesn’t need to exist. Customers deserve better.”

slpj

Now that it's announced that coop are taking over, what happens if you don't want to go with the coop?

What happens if you decide to switch now, say to EDF?

System

slpj wrote: »

Now that it's announced that coop are taking over, what happens if you don't want to go with the coop?

What happens if you decide to switch now, say to EDF?

My reading of the situation is that you are free to do what you want and any accrued credit should be repaid with your Final Bill.

Smodlet

Energy price hikes are a nightmare waiting to happen, for those on fixed tariffs. I suggest all who can build their own generators, as Tom Good did back in the '70s. What do you suppose the penalty is for stealing pig pooh?

tomthered

Jazzy_B wrote: »

I cancelled DD on Sunday but just phoned bank and they have reinstated it, saves any hassle on my part. Have to say Ofgem have come up trumps on this one

Same here but bank advise that notice is sent to the company that you have cancelled, so its immaterial that we reinstated it. However, as its a new company, only they can apply for a DD from your account as the other is cancelled. In the FAQ's on the GBenergy site it does say that the COOP will get in touch to restart a new one as this is under the heading "What if I have cancelled my Direct Debit".

So I hope this helps others with similar questions.

phillw

uptdale wrote: »

Now if I agree to a DD in favour of one company, I do not expect the benefit of that DD to be taken by another company without my permission - or any opportunity for me to assess the creditworthiness of that company. Can anyone familiar with banking explain how that works? If it is right that another company can take the benefit of my DD without my say so, it should make everyone more wary of agreeing to DDs.

I wouldn't have said that cancelling the DD was a no brainer, it's a knee jerk reaction.

Because of the DD guarantee then you're not supposed to have to worry about the credit worthiness of the company, although you may of course have to worry about the credit worthiness of your bank.

My guess with the DD is that they can be transferred, because it's cheaper for the banks and for coop. This may involve coop energy buying part or all of GB energy.

That is why they don't want you to cancel them, because you're screwing them over with higher admin costs. Right when they are doing something nice and honouring a contract that put GB energy out of business in the first place.

I don't think there was a conspiracy behind the timing, but of course it's impossible to know. On balance of probability they were operating at a loss and hit a wall paying for energy or payroll and the directors had no confidence of a deal going through immediately and so their legal advice would be to fess up. It may have been a negotiating strategy to get ofgem or coop energy to commit.

Ofgem aren't any good at identifying competitive or sustainable businesses, so spending more than a couple of days on it is unlikely to help.

phillw

Hengus wrote: »

In my view, Ofgem urgently needs to set up a scheme similar to the ATOL bond that new airline entrants have to pay BEFORE they are awarded an airline operating licence.

With energy prices going up all the time then an upfront bond wouldn't cut it. However it's operated it will be the customers that pay, because where else is the money going to come from?

uptdale

Because of the DD guarantee then you're not supposed to have to worry about the credit worthiness of the company

I think you do have to. The DD guarantee protects you against errors in payment. It does not protect you if the DD payment results in a credit balance and the company subsequently becomes insolvent and cannot repay you.

phillw

uptdale wrote: »

I think you do have to. The DD guarantee protects you against errors in payment. It does not protect you if the DD payment results in a credit balance and the company subsequently becomes insolvent and cannot repay you.

The ofgem safety net covers if they become insolvent. For other industries you may of course have a point.

I'm not sure why anyone would care about the sustainability of the company taking over from GB energy, when you didn't consider the sustainability of GB energy itself or got it so wrong.

sheff6107 wrote: »

Why? The DD is set up to take your money and put it into a company's account that is no longer trading. It's like posting a blank cheque through the letterbox of a boarded up business.

As of today any payments need to go into the Co-op's account and we don't know the details yet.

As they are advising people not to cancel the DD and that coop energy will contact those who have cancelled the DD, then I suspect that are going to try to get the original DD payments going to the right place & those who cancel are just costing Coop energy money for no good reason. I don't know what part of GB energy they'd have to buy to get access to the DD, but I can't see any moral or legal reason why they shouldn't be allowed to.

It's clear that coop energy have bought at least some of gb energy and are trading again. I suspect that they avoid the usual insolvency process and it all goes through ofgem.

"We will continue to run the business using the existing GB Energy systems supported by enhanced technology as well as experienced, former GB Energy employees and service providers to minimise the disruption to you and to our Co-operative Energy customers. We will also increase the number of customer service advisers to ensure we deliver the service you would expect."