Financial resilience
Companies with an energy supplier licence have to follow rules about how they operate to make sure that they do not take unnecessary financial risks.
Companies with an energy supplier licence must follow certain rules and principles to be able to run their business responsibly. They must put their own capital at risk and make sure they are not relying on their customer’s money to fund their business.
Companies must:
- pass milestone assessments
- follow the Operational Capability Principle and Financial Responsibility Principle
- meet the Minimum Capital Requirement
- separate out money to pay Renewables Obligations called ‘ringfencing’
Energy suppliers must not overly rely on customers money to fund their business.
In certain circumstances we may tell suppliers to set aside customer credit balances from other financial resources. This means that if an energy customer’s account is in credit, their supplier will still have the money to repay in a timely manner.
Our role and responsibilities
It is important that households and businesses have a secure energy supply and trust that their energy supplier is resilient to changes in the market, such as a sudden increase in energy prices.
Energy is an essential service. Our strict rules make sure that customers are protected if their supplier goes out of business.
If an energy supplier goes out of business this can cause disruption in the energy market, and the costs can be added to household bills. We want a resilient market that attracts long-term investment that will benefit consumers.
Financial resilience publications
Includes guidance, policy, news and insights.