IF Tomato Goes Bust

MWT

coupleuk said:

Personally, I'd like to see a restructuring of the SOLR scheme so that much more of the cost of failure is shifted away from customers of other suppliers and on to customers of the failed supplier. My reasoning is that if customers choose an "it seems too good to be true" tariff which they will benefit from if it succeeds, it's fair game to expect those customers to take more of a hit if it fails.

I think you probably mean the cost should be given to SHAREHOLDERS of the failed Company.

Its a bit unfair to blame customers for wanting to save money - and your suggestion would stop any new competition because nobody would ever sign up to them.

It is a tricky one, there is no way to pass costs directly to shareholders, it would break the very foundations of a limited liability company.

I would love to see the directors being pursued more aggressively, and sanctioned appropriately, especially when there are significant movements of cash to related entities which are not in the ordinary course of business for a consumer energy supply company.  

QrizB

MWT said:

I would love to see the directors being pursued more aggressively, and sanctioned appropriately, especially when there are significant movements of cash to related entities which are not in the ordinary course of business for a consumer energy supply company.

And those are the sort of transfers that should be prevented by one of the clauses in Ofgem's provisional order.

MWT

QrizB said:

MWT said:

I would love to see the directors being pursued more aggressively, and sanctioned appropriately, especially when there are significant movements of cash to related entities which are not in the ordinary course of business for a consumer energy supply company.

And those are the sort of transfers that should be prevented by one of the clauses in Ofgem's provisional order.

I fear that horse has already bolted....

mmmmikey

coupleuk said:

Personally, I'd like to see a restructuring of the SOLR scheme so that much more of the cost of failure is shifted away from customers of other suppliers and on to customers of the failed supplier. My reasoning is that if customers choose an "it seems too good to be true" tariff which they will benefit from if it succeeds, it's fair game to expect those customers to take more of a hit if it fails.

I think you probably mean the cost should be given to SHAREHOLDERS of the failed Company.

Its a bit unfair to blame customers for wanting to save money - and your suggestion would stop any new competition because nobody would ever sign up to them.

Hi @coupleuk - no, tbh that's not really what I mean at all.....

Firstly, I absolutely agree that customers are in no way to be blamed for wanting to save money, and I don't think I've suggested that? 

My point is just that where there are costs of running the SOLR scheme that are paid for by energy customers, I'd like to see those costs divided up differently so that the customers that have gained from paying lower prices take a bigger hit than those that haven't. I agree with the principle of "everyone chipping in". I'm just suggesting that the bill should be split differently so that those that have benefitted the most pay the most. I think it's absolutely appropriate that we should all pay something as we all benefit to some extent through the competition that allowing these start-ups creates. I'm suggesting changing the balance slightly.

As far as shareholders are concerned, they are already usually the biggest losers since if the failed company goes bust the shares become virtually worthless and they lose all their money. Picking up on your point on competition, unless you limit shareholders liability to their shareholding (which they already may lose entirely) then investing becomes too risky and that acts as a brake on new start-ups.

Chrysalis

I obviously dont want them to go under, but I think its right for Ofgem to be public in situations like this and to take action early if its to mitigate liabilities being put on to future SC.  

But if it does go under unless they write off those who havent paid bills I dont think liabilities will be huge as its just one supplier this time and they dont used fixed DD, so only credit balances would be compensation.

masonic

Chrysalis said:

I obviously dont want them to go under, but I think its right for Ofgem to be public in situations like this and to take action early if its to mitigate liabilities being put on to future SC.  

But if it does go under unless they write off those who havent paid bills I dont think liabilities will be huge as its just one supplier this time and they dont used fixed DD, so only credit balances would be compensation.

It might not be as simple as that in this case. We know that they are selling energy way below what they could possibly be buying it for. They have made related company loans, and have paid significant sums to their parent company for services. Meanwhile they have not been paying third parties. They may well have a viable business model that can support that with continued investment, but if the end is in sight, then their investors are unlikely to advance any more capital. Leaving some enriched companies within the same group, beyond the reach of the administrators and Ofgem, and lots of debts.

QrizB

masonic said:

... and lots of debts.

That's almost certain, but most of those debts will be to other energy market businesses (and eg. HMRC). The mitualised liabilities that Ofgem seems keen to avoid are the credit balances of customers, and there shouldn't be all that many of those.

Some customers might well find themselves owing Tomato money, even, when all the accounts get reconciled using index readings rather than half-hour data.

MWT

QrizB said:

That's almost certain, but most of those debts will be to other energy market businesses (and eg. HMRC).

I guess we may see some of those debts to the DNO's come back to customers through the standing charge though as they are allowed to recover some losses that way I believe?

Qyburn

mmmmikey said: 

Personally, I'd like to see a restructuring of the SOLR scheme so that much more of the cost of failure is shifted away from customers of other suppliers and on to customers of the failed supplier. My reasoning is that if customers choose an "it seems too good to be true" tariff which they will benefit from if it succeeds, it's fair game to expect those customers to take more of a hit if it fails.

I was with Iresa when they went bust. At the time I was surprised that I didn't lose my credit balance. As you say I benefitted from their pricing, and it would have seemed fair to have accepted that risk. But it would discourage customers from holding a credit balance.

HillStreetBlues

Is now BG now the fav as the SoLR?