Centrica : 15 Oct 2021 Energy companies need to be regulated like banks to prevent another crash

Published: 2021-10-15 11:22:24 ET CNA.L

By Chris O'Shea Group Chief Executive

Firstly, energy supply companies must be financially robust. Remarkably, there are no cap adequacy requirements in the energy industry today. Energy suppliers must be required to maintain sufficient readily available capital to withstand market volatility like banks and insurance companies have to.

Secondly, Ofgem should monitor all suppliers to ensure that customer credit is not being misused to fund day-to-day operations. Ideally, customer deposits should be ringfenced

Thirdly, Ofgem should ask suppliers to pay mandatory environmental costs such as the Renewable Obligation in regular instalments rather than wait for one lump sum payment in October. Customers benefit from the Warm Home Discount and the ECO programme that insulates homes and there must be stronger sanctions for companies that do not meet these obligations.

And lastly, there needs to be more focus on who is a fit and proper person to hold an energy supply licence in the same way individuals in banks and insurance businesses must pass strict vetting procedures.

It's clear that the energy industry stands at a crossroads. There is huge potential for the country as we modernise and decarbonise our energy infrastructure. Net zero will cost money but if we get it right, there are huge advantages, not least in well paid jobs in areas such as renewables and hydrogen. But we must take customers with us on this journey and show we as a sector are worthy of their trust and confidence.

Getting the right regulatory framework shouldn't be difficult, and it must start now.

By Chris O'Shea Group Chief Executive

Disclaimer

Centrica plc published this content on 15 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 October 2021 15:21:04 UTC.