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- Energy firms applying for a license will have to show they can fund their operation for the first year
- They will also have to outline they expect to comply with regulatory obligations
- It is hoped the new rules will stop further small suppliers collapsing in the future
Small energy suppliers will face stricter tests before they are allowed to open up shop in the UK under new plans from Ofgem that follow a recent series of failures. Energy companies applying for a license will now have to demonstrate they can adequately fund their operations for their first year, outline how they expect to comply with regulatory obligations and show their intentions to provide a proper level of customer service. Directors and major shareholders of companies applying for an energy license, as well as senior managers, will also have to show they are 'fit and proper' to hold a license.
A raft of small suppliers have gone bust recently including Extra Energy, Spark Energy, Future Energy, National Gas and Power, Iresa Energy, Gen4U, Usio Energy, One Select, Our Power, Brilliant Energy and Economy Energy. Ofgem said its moves should help drive up standards for customers as well as reduce the risk of supplier failure.
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