Supplier Protection Payment

Chrysalis

We are a capitalist country, suppliers going bust is ok.  This intervention from Ofgem currently is excessive, and someone needs to educate them, other sectors dont have this protection from consumer debt.

The only reason it was a problem before because they havent ring fenced customer credit balances, which of course is still something they havent done.

Sadly Ofgem is too focused on the suppliers right now instead of consumers, but I suppose is expected when their remit is primarily to maintain competition.

This wont be a one off, and I expect its also going to be on the SC not unit rate.

There are many things they can do to get consumer debt down without increasing bills to do so, but they just seem so far down the wrong path they cant be stopped.  They seem to still be in the mindset, they havent radically got things wrong and just keep doing these sticky plasters on a broken system.

Chrysalis

matt_drummer said:

pseudodox said:

Charging £17 on every energy bill would not be as fair a collection method as using money from general taxation.  That energy bill surcharge might be for a single household on a pension or low income already struggling with bills but above a benefits claim level. Or it might be for a family/household with 2 or more tax payers, or possibly some very high earners to whom £17 would be peanuts.  

Surely charging every bill payer who is protected is fairest?

In fact you could argue that tax payers, especially high earners, are the least likely to default on their payments and shouldn't pay anything at all?

Maybe those who are at most risk of defaulting should pay for this.

I go to work and pay my taxes that fund benefits and now I have to contribute even more to fund the people I am already funding not to pay for their energy.

And you think that is fair?

I think there is an argument to be made that it should be only charged to fixed DD accounts.  But really I think there should be no charge at all, Ofgem have already recently artificially boosted the suppliers margins to make them supposedly robust, so this extra charge is either an admittance that previous intervention is not adequate or they just falling whim to excessive lobbying from the supplier.

Debt recovery already has a process in this country which the suppliers can follow, there is also many things the suppliers can do to avoid debt getting so high in the first place, some of which have been suggested by ministers but ignored.

The truck needs stopping, because next year there will be another announcement that SC is being increased for X reason.

deano2099

Chrysalis said:

We are a capitalist country, suppliers going bust is ok.  This intervention from Ofgem currently is excessive, and someone needs to educate them, other sectors dont have this protection from consumer debt.

Other sectors don't hold so much consumer money. The only one I can think of that does is banks, and they also have that protection.
You could remove the protection, but then consumers would much more actively get money out of the system, money that the energy suppliers have now grown to rely on, so rolling that back is... difficult.

The whole reason monthly fixed direct debit was introduced was to allow customers to spread the cost of their energy over 12 months, to allow for easier budgeting. That's why it was bought in.

It's now developed into a source of free borrowing for energy companies, to the point people are being told they can't have a deficit on the account at any time of year (even from the "good" suppliers like Octopus). But how you wind that back I don't know.

I think if the consumer protection for credit balances was removed tomorrow, we'd see half the energy companies just gone by next week as people clambered to claim back their credit balances, which those companies just don't have. That can't be a healthy place to be.

Troytempest

A far more robust approach to non payers please.
Funny that when you see these poor people on the telly they seem to manage to have Iphones and lovely painted nails. A provocative generalisation I know but such is the modern world!

QrizB

ArbitraryRandom said:

... I believe £17 is less than we've all been paying to cover the SOLR costs over the last couple of years (which I believe are supposed to end soon). 

It might seem like a couple of years, but the surge of failed supplies was only a year ago.

The SoLR costs are being recovered over two years IIRC, so we'll still see them on our bills for another year yet.

MattMattMattUK

Chrysalis said:

We are a capitalist country, suppliers going bust is ok.  This intervention from Ofgem currently is excessive, and someone needs to educate them, other sectors dont have this protection from consumer debt.

Suppliers going bust is fine, I agree on that. The reason that others sectors do not have protection from consumer debt is because other sectors do not have a profit cap, are allowed to stop supplying non-payers and are allowed to take proper recovery action. In the energy sector suppliers have to keep supplying their product regardless of whether the customer pays or not, their profit is capped at 1.9% and they are massive restrictions on them recovering funds for unpaid bills. By all means remove this protection, but that would also require unshackling the suppliers first. 

Chrysalis said:

The only reason it was a problem before because they havent ring fenced customer credit balances, which of course is still something they havent done.

Ring fencing customer credit balances would increase energy costs, the government has, via the regulator, made the decision to keep costs down in the short term and risk higher costs long term, largely because that is what people seem to want. 

Chrysalis said:

Sadly Ofgem is too focused on the suppliers right now instead of consumers, but I suppose is expected when their remit is primarily to maintain competition.

Ofgem is focused on keeping the energy sector operational, they are not focussing on suppliers, profit is capped at an incredibly low level, low enough that some companies are leaving the market (Shell).

Chrysalis said:

There are many things they can do to get consumer debt down without increasing bills to do so, but they just seem so far down the wrong path they cant be stopped.  They seem to still be in the mindset, they havent radically got things wrong and just keep doing these sticky plasters on a broken system.

Not really, unless you are talking about either raising costs on other bill payers, or raising costs for taxpayers. The system is not broken, it is far from perfect, but not broken. 

Chrysalis said:

matt_drummer said:

pseudodox said:

Charging £17 on every energy bill would not be as fair a collection method as using money from general taxation.  That energy bill surcharge might be for a single household on a pension or low income already struggling with bills but above a benefits claim level. Or it might be for a family/household with 2 or more tax payers, or possibly some very high earners to whom £17 would be peanuts.  

Surely charging every bill payer who is protected is fairest?

In fact you could argue that tax payers, especially high earners, are the least likely to default on their payments and shouldn't pay anything at all?

Maybe those who are at most risk of defaulting should pay for this.

I go to work and pay my taxes that fund benefits and now I have to contribute even more to fund the people I am already funding not to pay for their energy.

And you think that is fair?

I think there is an argument to be made that it should be only charged to fixed DD accounts.  But really I think there should be no charge at all, Ofgem have already recently artificially boosted the suppliers margins to make them supposedly robust, so this extra charge is either an admittance that previous intervention is not adequate or they just falling whim to excessive lobbying from the supplier.

Their profit margins are capped at 1.9%, up from 1.8% if energy suppliers made no profit it would barely make any difference to customers. It was not "artificial" any more than the cap on profits is artificial. This charge is a recognition of a changing market, one where profits are capped at an incredibly low level and the rate of consumers defaulting is increasing significantly. 

Chrysalis said:

Debt recovery already has a process in this country which the suppliers can follow, there is also many things the suppliers can do to avoid debt getting so high in the first place, some of which have been suggested by ministers but ignored.

There is a process, at a best case scenario it takes more than a year, in many cases it is never recovered despite taking court action, they are unable to enforce the debt. All whilst they are legally compelled to keep suppling energy to people who refuse to pay for it. There are other things that can be done, some countries offer pre-payment only, you must have money in your account, others cut customers off immediately ta the end of the month if they do not pay. Most have far better debt enforcement systems than we do in the UK. 

Chrysalis said:

The truck needs stopping, because next year there will be another announcement that SC is being increased for X reason.

And? The SC should cover the fixed costs of operating the network, part of that is bad debt. The energy charge should cover the cost of supplying energy. The people who disagree seem to be those who want "someone else" to pay. 

Gerry1

QrizB said:

ArbitraryRandom said:

... I believe £17 is less than we've all been paying to cover the SOLR costs over the last couple of years (which I believe are supposed to end soon). 

It might seem like a couple of years, but the surge of failed supplies was only a year ago.

The SoLR costs are being recovered over two years IIRC, so we'll still see them on our bills for another year yet.

Nope.  It seems like two years ago because they DID start falling like dominoes two years ago !

https://www.ofgem.gov.uk/news-and-views/blog/how-youre-protected-when-energy-firms-collapse

ArbitraryRandom

In fairness, if you count the start or the end - it's been a tough few years (probably since 2016), and I can't see it getting all that much better before 2030... 

... that's it, I'm making a cuppa and going back to bed. You can all fix the country without me for the day  

QrizB

Gerry1 said:

QrizB said:

ArbitraryRandom said:

... I believe £17 is less than we've all been paying to cover the SOLR costs over the last couple of years (which I believe are supposed to end soon). 

It might seem like a couple of years, but the surge of failed supplies was only a year ago.

The SoLR costs are being recovered over two years IIRC, so we'll still see them on our bills for another year yet.

Nope.  It seems like two years ago because they DID start falling like dominoes two years ago !

https://www.ofgem.gov.uk/news-and-views/blog/how-youre-protected-when-energy-firms-collapse

That's what I get fpor trusting my memory. Thanks for orrecting me, I'll be more careful next time!

Qyburn

Gerry1 said:

QrizB said: 

It might seem like a couple of years, but the surge of failed supplies was only a year ago.

The SoLR costs are being recovered over two years IIRC, so we'll still see them on our bills for another year yet.

Nope.  It seems like two years ago because they DID start falling like dominoes two years ago!

https://www.ofgem.gov.uk/news-and-views/blog/how-youre-protected-when-energy-firms-collapse

Iresa failed in 2018