AN EXPERT fears the potential demise of Coventry firm Economy Energy is proof the market ‘isn’t working’.
Head of the Warwick Business School Global Energy Research Network, professor David Elmes, has criticised the government’s approach to regulating suppliers.
As we reported yesterday, Economy Energy has ceased trading days after a watchdog threatened to revoke its licence.
Regulator Ofgem had raised concerns about refunds, payments and ‘unacceptable’ customer service at the city firm.
The company, based in Friars House, Manor House Drive, near Coventry train station, has more than 200 employees which cater to nearly 250,000 customers.
Professor Elmes said: “News that Coventry-based energy supplier Economy Energy has ceased trading, less than a week after Ofgem prevented it taking on new customers, is more evidence that the way energy companies are expected to compete isn’t working.
“Last year we saw eight energy companies collapse and the merger between SSE and nPower fall apart.
“The collapse of Economy Energy shows this year is going to be no easier for the energy sector.
“The government’s price cap is making it hard to run a viable retail energy business in the UK.
“While it’s right to ensure customers get a fair deal and good service, the government and Ofgem are struggling to support a sector that’s essential to the UK economy.
“For customers of Economy Energy, the industry regulator Ofgem will organise transfer of their accounts to another supplier.
“But for staff at the company, this is a difficult and uncertain time as accounts are moved to a new provider.”
The watchdog has assured the firm’s customers their energy supplies will continue and prepayment meters can be topped up as normal, amid speculation Economy Energy has collapsed.
The firm posted on its website: “Economy Energy has ceased to trade.
“Ofgem’s advice is not to switch, but to sit tight and wait until the new supplier has been appointed.
“This will help make sure that the process of handing customers over to a new supplier, and honouring credit balances, is as hassle free for customers as possible.”
The government caps energy prices at £1,137 a year for an average dual-fuel customer who pays by direct debit, saying it ensures a fairer price for customers.
Ofgem chiefs also say its approach encourages competition with many more suppliers emerging to compete with the ‘Big Six’ energy firms over the last few years.
Customers who have questions should visit the FAQs on our website. Or if they need additional support, call Citizens Advice on 03454 040 506 or email them via their webform. Alternatively, get in touch through Ofgem’s facebook or twitter feed @ofgem.