Ofgem has published new guidance for new applicants to the energy market, tightening the necessary criteria and requirements for new licences.
The publication follows a consultation that was launched in February and aims to make sure new energy companies have resilient business models and the capacity to manage significant financial risk in current and future market conditions.
The new rules will give Ofgem the power to look at whether key staff members have the necessary experience and capabilities to manage financial risk in the energy market.
The energy regulator has increased the type and scope of information that it will require from new licence applicants to assess them.
Ofgem said: “We consider that the current market conditions present an elevated risk to the financial stability of many new entrants and therefore an increased risk to consumers of poor service levels, supplier failure and ultimately mutualised costs.
“Therefore, we consider that it is in line with our principal objective to this factor in our risk assessment and overall licensing process, in order to protect the interests of consumers.”
A few days ago, Energy UK sent a letter to the Chancellor asking for “extra measures to protect the UK economy and support households and businesses with the costs of energy.”