The collapse of failed electricity supplier Solarplicity Supply is expected to cost households £4.5m – fuelling long-standing frustration about fairness in the market.
French state-owned giant EDF took on Solarplicity’s customers after the minnow collapsed in August 2019, and has now asked for Ofgem’s help with the costs of doing so.
When an energy supplier goes bust, Ofgem’s procedure is for a stronger rival to be found to take on the customers. That company can then ask Ofgem to recoup costs of the arrangement from the rest of the industry. Suppliers then typically pass this on to customers through household bills.
Critics question this arrangement as they believe it distorts the market by taking responsibility away from businesses that have failed, and does nothing to discourage struggling companies from taking advance payments from customers.
More than £3.6m of the total £4.5m claimed by EDF is the amount it has paid back to customers who were in credit to Solarplicity Supply at the time of its collapse.
There was also £303,091 in operational costs. Ofgem said it is minded to approve the claim, noting that the credit balance costs are “additional to the costs that EDF would face as a supplier and costs it cannot influence in any meaningful way”.
The regulator said that no supplier had volunteered to take on Solarplicity’s customers, and it had appointed EDF to secure the “best outcome” for customers.
It will make a final decision on the payments in November.
Herts-based Solarplicity Supply had around 7,500 household customers and just under 500 business customers.
EDF said that “operating a responsible and reliable business” allowed it to “support customers of failed suppliers in ensuring that their finances and energy can be protected.”
A spokesman added: “We were pleased to have supported customers of Solarplicity last year to ensure they were protected after they were left without an energy supplier.”
Separately, Octopus Energy is creating more than 1,000 jobs and a new innovation centre in Manchester.
The fast-growing supplier, which has about 1.4m customers, plans to double its workforce by the end of next year, with roles spread from Brighton to Leicester.
Its new technology centre in Manchester will develop technology to help enable more renewable power and electrify heat and transport. Both Boris Johnson, the Prime Minister, and Rishi Sunak, the Chancellor, welcomed the announcement.