Following our consultation in June 2022, we are consulting on our revised proposals to strengthen financial resilience in the retail energy market. We are proposing to set a minimum capital requirement for all domestic suppliers as well as ringfencing of Renewable Obligation (RO) receipts attributable to domestic supply. This will be supported by an enhanced Financial Responsibility Principle and monitoring framework across all suppliers. We are not proceeding with our earlier proposals to ringfence customers’ credit balances although we will be setting a monitoring threshold to avoid suppliers overly relying on these funds and are proposing to introduce the power for Ofgem to direct individual domestic suppliers to ringfence CCBs when they are at risk of or don’t meet certain financial standards.
The modifications we are proposing are set out in the subsidiary documents.
We would welcome any responses to the proposed changes as part of this consultation.
This page has been updated to publish draft ringfencing credit cover templates that we intend to use to operationalise new ringfencing requirements, should we decide to implement them. These templates are for a First Demand Guarantee, a Standby Letter of Credit, terms for an Escrow Account, and terms for a Trust Account. We welcome any comments on these documents via email to RetailFinancialResilience@ofgem.gov.uk by close on 17 March 2023. We plan to consider any representations and to publish final versions of these documents alongside our decision on our statutory consultation.