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Is small beautiful?

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Spark Energy. Extra Energy. Gen4U. Future Energy. Usio Energy.Iresa. National Gas & Power. These seven small companies have one thing in common. During 2018, each ceased providing electricity supplies to British customers.

During last year there were no fewer than 73 active electricity suppliers  licensed by the regulator Ofgem . In 2017 there were 60. This time seven years ago, there were just 14.

This churn has set alarm bells ringing at the regulator Ofgem. Belatedly it is now seeking to require prospective new entrants to demonstrate they have the money and the resources to operate for at least a year, before being granted a licence.

Small suppliers have been feeling the bite of rising prices and inadequate balance sheets. Often in combination with poorly executed hedging strategies, and a lack of market expertise.

The news that some are unlikely be able to pay what they owe under the Renewables Obligation scheme compounds their survival challenge – and may have compelled Ofgem to act. There is currently £59m missing that suppliers should have paid into the scheme that Ofgem is responsible for administering.

While several suppliers are known to be  a bit behind with RO payments, the regulator was already investigating Spark Energy over its non-payment  before it crashed out of the market. I understand it has specifically instructed two others, Ure Energy and Eversmart , to pay in monthly instalments what they owe by 31 March.

Elinore Mackay

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