Supplier Failure - Advice re Supplier of Last Resort (SoLR) process not fit for purpose

PowerDev

Not sure if this has come up but I first complained to OFGEM about the SoLR process which they denied was faulty.  I then reported them (via my MP) to the Parliamentary Ombudsman.  Who unfortunately could not understand the serious systemic failure involved.

OFGEMs advice is that, after your Supplier has failed you do not switch and stick with the SoLR until the final bill (with credit refund) has been prepared by the Failed Supplier (FS).  And the credit paid to the Customer Account with the SoLR.

Wholesale Energy prices were actually static in actual terms from 2010 to 2020.

However, from early 2021 they started to hike up causing Supplier Failures. 

As the Russians first stopped issuing Short Term contracts as European Gas demand picked up after the Pandemic. 

And OFGEMs advice re the SoLR process has probably cost a lot of money to customers.

At the start of 2021 I was with Supplier A on a Fixed rate Tariff. 
Paying 12.5p/kWh (Inclusive – Unit rate and Annual Daily charge divided by Annual units) for Electricity.   
Supplier A failed at the end of January and I was assigned to SoLR Supplier B at (Variable) charge rate 17.7p/kWh. I stuck with Supplier B until early April, still waiting for the credit.  At this point I switched to Supplier C at 15.4p/kWh; the credit from Supplier A actually turned up on the SoLR Supplier B final bill. 

In September Supplier C failed and I was assigned to SoLR Supplier D.  I could see their charge would be 21.5p/kWh. 

Knowing that the Russians had now been shutting down Gas pipelines to Europe I therefore knew that Wholesale prices would hike further. 
I immediately applied to switch to (major) Supplier E on a 2 year Fixed rate tariff of 20.7p/kWh and the Switch was effected at the beginning of October. 

However, SoLR Supplier D did not identify me as a Customer of Failed Supplier C.  I contacted their customer support and they had to set up a special process to pass the final credit from Supplier C across to me when the latter produced final bills early February 2022. 

Had I stuck with SoLR Supplier D until Feb 2022 the best fixed rate deal I could have got would have been 44p/kWh with the Cap ending up at 35p/kWh.  As against the 20.7p/kWh I have been paying since October 2021.

The reason for SoLR Supplier D not identifying me as a Customer of Supplier C was that the as part of the process either that SoLR or the DNOs do an extract from the National Meter database. Over 26 million Customer Meter Point Allocation Records - MPANs.  (Each record being a sequence of assignments of Supplier to MPAN with date of switching).   

The extract was used to determine which Customers are with Failed Supplier C and not using or cross checking against a list of Customers from Failed Supplier C. 
From the information I saw it looks like the MPAN extract process is faulty, it only shows the assignment of Supplier to Customer at the time the data is extracted, not as at the  date when the Supplier C failed. 

Thus in my case the extract must have been done after I had switched to Supplier E.   

It is a trivial change to a relational database query to make the modification to the MPAN extract!  Although it has to be applied to a very large number of records when executed.  

 As I have emphasised, had I waited for the Failed Suppler C to SoLR D process to complete I would be paying considerably more for my Electricity.  OFGEM denied that their advice to stick with the SoLR was faulty and the Parliamentary Ombudsman Could not see any systemic failure which is of course a completely wrong interpretation. 

As a number of Suppliers failed in 2021 a lot of Customers may have been impacted, although most of them may not realise what happened.     

Regards, (Removed by Forum Team)

Retired, 

Ex CEGB and National Grid UK

GB Electricity Operations - Generation, Demand, Fuel and Market modelling  

GingerTim

Them's the breaks.

Mstty

I would suggest perhaps you expected too much from the system at a point of great stress (to the system) and the companies trying to stay in business.

Like you we chase the ever decreasing price of electricity to the point where the bills were so low, transferring every year and even getting cashback to boot on each transfer.

The problem is each time you potentially found a better deal was mid process between a failing company and one that neither had the capacity or appetite for what Ofgem forced upon them. So before the failed supplier and new supplier could dot the it's and cross the t's you were off chasing the rainbow.

We, on the other hand, sat still whilst it all came out in the wash before choosing a fix. Definitely not as good as the one you ended up with so think of yourself as a winner despite any complaints you may have.

MattMattMattUK

Is there a question or is this just a rant?
If the latter then it would be better posted here.
https://forums.moneysavingexpert.com/categories/praise-vent-warnings

[Deleted User]

I contacted their customer support and they had to set up a special process to pass the final credit from Supplier C across to me when the latter produced final bills early February 2022. 

There is no credit transfer. As consumer credits are not held in escrow domestic consumers would be deemed to be unsecured creditors of a failed company. As such, before Ofgem stepped in, we could expect pennies in the £.

The administrator of a failed supplier produces a final bill which is passed to both the SoLR and the customer. If there is a credit balance then this is honoured by the SoLR who then reclaims the money from Ofgem as a SoLR cost. These costs are then added to all consumer bills via the standing charge.

Ofgem has reviewed the need for consumer credit protection by suppliers and it is reviewing it again.

Chrysalis

Dolor said:

I contacted their customer support and they had to set up a special process to pass the final credit from Supplier C across to me when the latter produced final bills early February 2022. 

There is no credit transfer. As consumer credits are not held in escrow domestic consumers would be deemed to be unsecured creditors of a failed company. As such, before Ofgem stepped in, we could expect pennies in the £.

The administrator of a failed supplier produces a final bill which is passed to both the SoLR and the customer. If there is a credit balance then this is honoured by the SoLR who then reclaims the money from Ofgem as a SoLR cost. These costs are then added to all consumer bills via the standing charge.

Ofgem has reviewed the need for consumer credit protection by suppliers and it is reviewing it again.

Do you think they will come to a different conclusion Dolor? this would be at least the 2nd review if they doing it again as it was reviewed not long ago when there was a proposal to isolate the balances.

The way I look at it, is that the suppliers want customers to have credit balances as it provides cash flow (monies for something not used yet) and reduces the chance of defaults, they will almost certainly have told Ofgem this, Ofgem's primary remit is to maintain competition in the market (prevent suppliers leaving the market), so they will likely conclude that credit balances are a good thing, then its a case of removing consumer credit protection could cause consumers en masse to make sure they dont have a high balance due to the risk of losing it when a supplier goes tits up.  So the only conclusion that I can draw is they will decide the status quo is fine with possible small tweaks to the system.  I dont think they will change to isolated balances because when they said they would a year or so ago, they had to backtrack on it due to some suppliers throwing a fit over it.

Also something I dont know the answer to, does a credit balance on a prepay have to be recovered the same way on the SoLR system as a credit balance on a credit account, or are credit balances on meters already isolated?

Mstty

With the current easy access interest rates anyone not on pay in full monthly direct debit is affectively losing out. (Of course I understand some need this as a budgeting took and can't be trusted to save for the winter months)

[Deleted User]

Chrysalis said:

Dolor said:

I contacted their customer support and they had to set up a special process to pass the final credit from Supplier C across to me when the latter produced final bills early February 2022. 

There is no credit transfer. As consumer credits are not held in escrow domestic consumers would be deemed to be unsecured creditors of a failed company. As such, before Ofgem stepped in, we could expect pennies in the £.

The administrator of a failed supplier produces a final bill which is passed to both the SoLR and the customer. If there is a credit balance then this is honoured by the SoLR who then reclaims the money from Ofgem as a SoLR cost. These costs are then added to all consumer bills via the standing charge.

Ofgem has reviewed the need for consumer credit protection by suppliers and it is reviewing it again.

Do you think they will come to a different conclusion Dolor? this would be at least the 2nd review if they doing it again as it was reviewed not long ago when there was a proposal to isolate the balances.

The way I look at it, is that the suppliers want customers to have credit balances as it provides cash flow (monies for something not used yet) and reduces the chance of defaults, they will almost certainly have told Ofgem this, Ofgem's primary remit is to maintain competition in the market (prevent suppliers leaving the market), so they will likely conclude that credit balances are a good thing, then its a case of removing consumer credit protection could cause consumers en masse to make sure they dont have a high balance due to the risk of losing it when a supplier goes tits up.  So the only conclusion that I can draw is they will decide the status quo is fine with possible small tweaks to the system.  I dont think they will change to isolated balances because when they said they would a year or so ago, they had to backtrack on it due to some suppliers throwing a fit over it.

It would seem that Ofgem has already made its Decision - for good or bad:

https://www.ofgem.gov.uk/sites/default/files/2023-07/FRC%20Decision%20doc%20-%20July%202023.pdf

• We have decided to proceed with our proposals to modify licences so that Ofgem can direct CCB ringfencing in specific circumstances as consulted on, provided it is in the consumer interest to do so. Ofgem will be able to direct ringfencing of CCBs when a supplier is below the Capital Target and/or when a supplier is below the Cash Coverage Trigger (where a supplier’s cash position goes below 20% of the value of its gross CCBs from fixed direct debit customers, net of unbilled.

  
  

  
  

Chrysalis

Thanks, looks like they will only be doing a portion of balances if they ever issue a direction, and wont be implemented until 2025, but better than what we have now.  I am assuming they are hoping it acts as a deterrent and capitalisation will increase avoiding the need for intervention, hence the delay before implementation.  Also still clear different suppliers have a different opinion on the risk level of whats going on with some saying its not going far enough (probably centrica) and others saying its going too far.

Clearly a compromise as their main remit is the competition.

PowerDev

The MSE system has just filtered out a reply I made to the first comment which also covers a number of misunderstandings of the current SoLR system from that and other comments here.  I've asked MSE for the text I wrote as I dont want to have to type it in again.   

Briefly, your credit with a failing supplier is protected as long as you are their customer at the actual date of Failure.  Dont switch before.  And OFGEM cannot force a Supplier to take on the SoLR role.  Hence the Bulb Energy failure not being covered by that process and taking a long time (including requests for HMG funding) to resolve. 

The point of this thread is to raise awareness of the failings of the Advice and the fact that even the Parliamentary Ombudsman cannot identify what is a systemic failure by the Regulator.  Need more readers to get their MPs involved. To get the facile change to the SoLR process MPAN database extraction query corrected!!

Regards

(Removed by Forum Team)

Chrysalis

stephenbrowning said:

The MSE system has just filtered out a reply I made to the first comment which also covers a number of misunderstandings of the current SoLR system from that and other comments here.  I've asked MSE for the text I wrote as I dont want to have to type it in again.   

Briefly, your credit with a failing supplier is protected as long as you are their customer at the actual date of Failure.  Dont switch before.  And OFGEM cannot force a Supplier to take on the SoLR role.  Hence the Bulb Energy failure not being covered by that process and taking a long time (including requests for HMG funding) to resolve. 

The point of this thread is to raise awareness of the failings of the Advice and the fact that even the Parliamentary Ombudsman cannot identify what is a systemic failure by the Regulator.  Need more readers to get their MPs involved. To get the facile change to the SoLR process MPAN database extraction query corrected!!

Regards

(Removed by Forum Team)

I agree people need to be more active, but I think one reason they not, is we have to push so much through our MP's that inevitably most of it gets lost, MPs only have so much they can do, they get very limited speaking time in parliament, people know this and as such tend to not bother unless its something they feel really strongly about.  So for this reason I think there needs to be more avenues available to the public on this sort of thing.

Appreciate you made available your previous affiliation with the industry.