Ofgem set-ups barriers to entry for small energy suppliers

October 10th, 2019

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Citing financial instability and poor customer service as the main reason, Ofgem is about to make it harder for new energy suppliers to enter the market.

Ofgem has outlined the scope for a review on the conditions it sets for new suppliers to operate. The conditions include the level of service customers get from the new energy entrants and it reviews the financial stability of the new company.

Over a recent period we have seen the collapse of a few energy suppliers, which is probably one of the bases behind the possible review. As it currently stands, earlier this month, Ofgem extended the ban on energy supplier Iresa from taking on more customers. Also at the start of the year, energy supplier Future Energy collapsed in January.

Comments from FreePriceCompare

Commenting on the news, Shailesh Ramani, Founder of FreePriceCompare said, “It easy to see why some critics will see this as a bad thing, as few energy suppliers in the energy market means fewer options and less competition but on the contrary this review is necessary.

Ultimately having lots of small energy suppliers which are failing to deliver on quality to customers will lead to a bad public image. The quality of service is an important competition point so having a minimum standard will actually help drive competition.”

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