Ofgem has proposed new rules for new energy suppliers. They will have to demonstrate they have the money and the resource to operate for at least a year before being granted a licence.
The move comes as small suppliers feel the bite of rising prices and inadequate balance sheets often in combination with poorly executed hedging strategies and a lack of market expertise.
Several small suppliers have gone bust in recent months, with strong market speculation that more will follow this winter.
The news that some are unlikely to be able to pay what they owe under the Renewables Obligation buyout 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 other suppliers may also be behind with RO payments, the regulator is investigating small firms Economy Energy and Spark Energy over their non-payment and has told Ure Energy and Eversmart to pay what they owe in monthly instalments by 31 March.
Update: Extra Energy went bust earlier today, with the news announced shortly after Ofgem had publicised its actions.
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