Utility Week

UTILITY WEEK | NOVEMBER 2021 | 13 Energy Reset SOLR PROCESS FEELS THE STRAIN A total of 36 energy suppliers have exited the market via the Supplier of Last Resort (SoLR) process since 2016, with more domes- tic customers facing SoLR so far in 2021 than the previous five years combined. The SoLR process was invoked once in 2016, eight times in 2018, nine times in 2019 and four times in 2020. In total, more than 14 million domestic customers saw their retailer fail and were appointed to a new supplier during these years. So far in 2021, 15 suppliers have ceased trading, with almost 24 million customers seeing their retailer fail. 2016 Failed supplier Number or customers SoLR appointee GB Energy 160,000 domestic Co-operative Energy DOMESTIC TOTAL: 160,000 2018 Future Energy 10,000 domestic Green Star Energy National Gas and Power 80 non-domestic customers Hudson Energy Iresa 100,000 domestic Octopus Energy Gen4u 500 domestic Octopus Energy Usio 7,000 domestic First Utility Extra Energy 108,000 domesti; 21,000 non-domestic Scottish Power Spark Energy Supply Ltd 290,000 domestic Ovo Energy OneSelect 36,000 domestic Together Energy DOMESTIC TOTAL: 551,500 2019 Economy Energy 235,000 domestic Ovo Energy Our Power 38,000 domestic Utilita Brilliant Energy 17,000 domestic SSE Cardiff Energy Supply 800 domestic SSE Solarplicity 7,500 domestic, c 400 non-domestic EDF Energy Eversmart 29,000 domestic; 10 non-domestic Utilita Rutherford Energy 280 non-domestic Total Gas and Power Toto 134,000 domestic EDF Energy Breeze 18,000 domestic British Gas DOMESTIC TOTAL: 479,300 2020 Gnergy 9,000 domestic Bulb Effortless 2,500 domestic; small number of non-domestic Octopus Energy Tonik 130,000 domestic Scottish Power Yorkshire Energy 74,000 domestic Scottish Power DOMESTIC TOTAL: 215,500 2021 Simplicity 50,000 domestic British Gas Evolve Green Network – 360,000 domestis; small number of non-domestic EDF Energy Hub 6,000 domestic; 9,000 non-domestic Eon Next PfP 80,000 domestic; 5,000 non-domestic British Gas MoneyPlus 9,000 domestic British Gas Utility Point 220,000 domestic EDF Energy People's Energy 350,000 domestic and 1,000 non-domestic British Gas Avro 580,000 customers Octopus Energy Green 255,000 customers; small number of non-domestic Shell Energy Retail Igloo 179,000 customers Eon Next Symbio 48,000 customers Eon Next Enstroga 6,000 customers Eon Next Pure Planet 235,000 customers: Shell Energy Retail Colorado 15,000 customers Shell Energy Retail Daligas 9,000 gas-only customers Shell Energy Retail GoToEnergy 22,000 Unknown at time of going to press DOMESTIC TOTAL: 24 MILLION Figures correct as of 21 October, 2021 He admits that the current absolute ver- sion of the price cap has provided a safety net for customers in the face of ballooning wholesale gas prices but says this is a case of the cap fitting in 1 out of 99 months rather than a mark of wider success. He has now updated his proposal to include what he describes as an "emergency circuit breaker", which sets an absolute cap set if prices rise or fall sharply in a set period of time. Speaking to Utility Week, he explains: "I envisage having a pre-set trigger, so if the wholesale price moves by more than X per- cent in Y days then the regulator would act. "Having that pre-set trigger would give certainty to everyone in their planning and it means Ofgem knows what its job is and when it has got to do it. "The other advantage is that by mak- ing it a pre-set trigger, it makes it hedge- able because everyone knows what they're facing." He points out there is now a live example of a relative price cap in the insurance mar- ket, where the Financial Conduct Authority (FCA) has introduced rules to end the prac- tice of "price walking". While he is keen for Ofgem to follow the FCA's lead on this point, he is wary about suggestions that it should go for a full- throated prudential regulation model for retailers. Speaking to Utility Week in late Septem- ber, former Ofgem chief executive Dermot Nolan said that while he had always sought to avoid such onerous oversight of the mar- ket, it may be necessary given the evident failure of some companies to hedge properly. He said: "I have huge sympathies for the workers and the customers of these failed suppliers but, as an owner, if you have committed to a fixed tariff and you haven't hedged accordingly, then you don't really have any right to complain. "The question is, going forward, should the regulator and government get very spe- cific about risk? Maybe we should have done that in the past – there are pros and cons to that." He said that if such a move was deemed necessary it would be "quite a step" and might require a "substantial increase in Ofgem's size". As an example, he pointed to the FCA's headcount of c4,000 versus Ofgem's c1,200 employees. He said: "That level of scrutiny would be very resource intensive. But maybe it's necessary." • You can find the full interviews with Day, Penrose and Nolan, as well as other Energy Reset copy, at https://utilityweek.co.uk/ category/energy-reset/

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