British Gas to protect almost £300m in customers’ cash in event of market shocks
British Gas has set up a scheme to protect the hundreds of millions of pounds it receives in advance payments from customers towards their future energy bills, after the “national scandal” that left households on the hook to pay £500m after a string of energy firms spent consumers’ deposits before going bust.
The Centrica-owned energy giant has pledged to ringfence the £294m it holds in credit balances through direct debits from its 7 million customers in a bank account separate from funds it uses to run the day-to-day business.
“I think that in any other walk of life using over £500m of customers’ money to prop up a business that subsequently failed would be considered a national scandal,” said Chris O’Shea, the chief executive of Centrica. “I’m amazed it is not treated as such in the energy business.”
The move makes it the first company in the sector to explicitly guarantee protection for customers in the event of future market shocks.
Almost 30 energy suppliers have gone bust in the UK since gas market prices rocketed to record highs last September. The regulator Ofgem has moved customers of failed businesses to a new energy provider – a process known as the “supplier of last resort” mechanism — with customer deposits covered by the new supplier.
However, the money, which Centrica has estimated from official filings is about a combined £500m, is ultimately recouped by charging every household in the UK an additional levy that is added to their energy statements.
Centrica said the cost of the energy company failures, including the lost consumer deposits, was responsible for 10% of Ofgem’s near-£700 increase in the cap on average household energy bills, to £1,971.
“Every single citizen in the UK will be paying for some of
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