Octopus: “Crude ringfencing customers’ credit balances is financially illiterate”

The regulator should resist pressure from companies to adopt ill-considered ideas, the boss of Octopus has said

Big Zero Report 2022

The boss of Octopus Energy has slammed proposals to ringfence energy customers’ credit balances.

On Monday, the regulator set out measures to protect customers’ balances and improve the resilience of energy retailers.

Since the start of the energy crisis in September last year, 29 energy suppliers have gone bust as a result of soaring energy prices, insufficient hedging and poor management.

According to Octopus Energy, ringfencing customer balances is an “inadequate measure” to tackle the causes and costs of supplier failure.

The company’s research shows that it would do nothing to fix the major causes of failure whilst increasing the pressure on consumers by adding up to £30 to customer bills every year and would increase supplier profits.

Instead, Octopus has proposed an insurance protection policy for credit balances, comparable to the kind provided to holidaymakers (ATOL) and FSCS used to protect bank deposits.

Greg Jackson, Chief Executive Officer and Founder of Octopus Energy Group, said: “It’d be bonkers to raise customer prices and increase supplier profits when much cheaper alternatives would be at least as effective in protecting customers’ money.

“Crude ringfencing is financially illiterate, which is why it’s not used in other industries. Its proponents need to be honest that it would cost customers a lot more than it saves, and would actually drive up supplier profits.

“The regulator should resist pressure from companies to adopt ill-considered ideas which would make the crisis worse for customers and more profitable for suppliers.”

ELN has approached Ofgem for a response.

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