Warning over hoarding of energy payments

WATCHDOG Ofgem has warned power firms about hoarding advance customer payments after a string of energy companies went bust owing tens of millions.

Rules state the cost of reimbursing customers is shared between their new supplier and the rest of the industry. But, in a letter seen by The Mail on Sunday, Ofgem said all energy providers must step up efforts ‘to mitigate the impacts of supplier failure’.

There are fears that the amount owed by failed firms will lead to higher bills. When a supplier goes bust, a rival is appointed to take on its customers. Ovo has been given the clients of Spark Energy, which employed hundreds in Edinburgh as well as 400 people at its HQ in Selkirk. It ceased trading last month, putting the future of its workers at risk.

In return for the extra business, Ovo will repay £20million in credit to Spark customers. But other firms must chip in too if all Spark customers are to be repaid.