Source · Select Committees · Business and Trade Committee
Recommendation 25
25
Not Addressed
Paragraph: 105
Ofgem should publish detailed proposals that will ensure energy suppliers have a higher level of...
Recommendation
Ofgem should publish detailed proposals that will ensure energy suppliers have a higher level of capital adequacy in the future which is in line with growth. Financial stress testing and monitoring of suppliers’ risk management strategies should be conducted by Ofgem as standard. Where individual or systemic problems are identified, Ofgem should work proactively with suppliers to resolve them. We recommend that Ofgem upskills its workforce to ensure it has the appropriate expertise to implement these provisions in an effective and proportionate manner. We ask Ofgem to publish a plan on how it intends to do this.
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Paragraph Reference:
105
Government Response
Not Addressed
HM Government · verbatim extract
Not Addressed
Ofgem launched its supplier stress testing regime earlier in 2022 and is analysing the responses to the second iteration ahead of winter. This forms part of Ofgem’s standard monitoring of supplier risk management practices, supported by regular requests for information such as hedging and financial data and proactive engagement with suppliers. on Strengthening Finance Resilience. This framework would build on this monitoring and engagement to introduce specific capital adequacy requirements for suppliers. Ofgem plans to develop an adaptive framework to ensure the right level of resilience, while minimising unnecessary burden and barriers to innovation. build on this to deliver a new capital adequacy regime. Implementation will be considered as part of the detailed plans for this policy and reflected appropriately in the annual Forward Work Programme.
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