Britain’s leading energy boss has warned he may be reluctant to bail out failed providers in the future and accused sector regulator Ofgem of letting down customers.
Chris O’Shea, chief executive of British Gas’s parent company Centrica, last week stepped in to rescue customers of collapsed supplier Tomato Energy.
But he said he may not do the same for more firms if – because they are unable to raise enough capital to meet Ofgem’s targets – they go under.
‘If they can’t raise the capital, if the market is not investible, why would I want to do that? I want to help customers. But if the same thing keeps happening then I don’t want any part of it,’ he said.
O’Shea’s comments come at a time of intense speculation that a big provider is on the verge of going under.
He called on the regulator to come clean over exactly how bad the situation is at firms that have fallen short of its yardsticks.
Looking for transparency: Chris O’Shea has warned he may be reluctant to bail out failed providers in the future and accused sector regulator Ofgem of letting down customers
Ofgem has given two big suppliers, Ovo and Octopus, a grace period to meet the new financial resilience targets.
These were introduced in the wake of market mayhem that saw a wave of firms go bust in 2021 and 2022 after Putin’s invasion of Ukraine pushed up energy prices.
The requirements are meant to ensure firms have a good buffer to withstand market turbulence.
Under Ofgem’s regime, suppliers that do not meet the capital targets but have a plan in place to put it right are not considered to be in breach of the rules. The regulator claims it is holding suppliers to account and that it closely monitors their plans to boost their capital within a reasonable time.
However, it has not made public any details over the extent of the shortfalls or how long it will take to rectify them, so consumers and other players remain in the dark.
‘We are calling for transparency,’ O’Shea said. ‘We need to know what is the shortfall, what is the recovery plan.’
Ofgem has not officially disclosed which providers did not meet its targets. But auditors at Ovo, a big provider with 4 million customers, recently raised a red flag over its ability to continue as a going concern. The firm recently parted ways with its chief executive and chief financial officer.
Ovo has also been given extra time to try to raise capital from potential investors, according to reports in the Financial Times. But O’Shea, pictured, demanded an end to the secrecy surrounding the process and called for better protection for consumers.
An Ofgem spokesperson said: ‘Claims we have relaxed our financial controls are simply inaccurate. Our regulation means the sector now holds around £7.5 billion in assets, a significant reverse from minus £1.7 billion during the crisis, meaning they are now better protected against failure, and the impact this has on customers’ bills.’
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