UK households have been charged £164 to pay for breakdowns at energy suppliers

UK households will be charged an additional £164 a year through their bills to pay for collapsed energy suppliers, according to charity Citizens Advice.

The 4 million customers transferred to new providers have also endured “months of misery,” with severe disruption, inaccurate billing and aggressive tactics from unregulated collection agencies, the CA said. Unlike energy suppliers, administrators can demand payment for unbilled usage for more than one year.

“These difficult experiences could have been avoided with market reforms and strict enforcement of the rules,” the charity said, adding that consumers risk having their rights “taken away”.

It called on Ofgem, the energy regulator, to restore “shattered consumer confidence”.

Thirty small energy suppliers went bankrupt over the past year due to poor capitalisation, rising wholesale gas prices and Ofgem’s inability to maintain adequate controls on new entrants to the market.

While most of the customers were turned over to other suppliers, who were paid £1.8 billion — or £66 per household — to take on the extra business, the largest, Bulb, was quasi-nationalized by the government, temporarily putting it under remained state property, and is now for sale.

The cost of energy supplier outages paid by all consumers totals £4.6bn – or £70 each for the failure of Bulb and a further £94m for the remaining collapses.

Citizens Advice said the government has made costly decisions about managing Bulb — including choosing not to pre-purchase energy — meaning taxpayers will have to cover the cost of buying energy at a premium.

Taxpayers are paying for Bulb’s operating expenses, including the £240,000 annual salary for Haydn Wood, the company’s founder and chief executive, who is leaving at the end of this month and who, along with co-founder Amit Gudka, earned more than £8 million from a share sale in 2018 .

The government plans to pass the cost of Bulb’s bankruptcy to the customer’s utility bills, but the CA said it needs to make sure it’s covered by the Treasury and not passed on directly to the customer.

Dame Clare Moriarty, chief executive of Citizens Advice, called on the government to review the supplier failure process and ensure that those in need are not chased for debt or left in limbo as they wait for a refund.

“More than half a year since the energy market went into free fall, the bill for supplier outages is still mounting,” she said. “In addition, we’ve found that people are too often pushed from pillar to post when their supplier fails, adding to their stress and worry at an already difficult time.”

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