Energy firms accused of hoarding nearly £2billion of customers' money
27 December 2022, 10:40 | Updated: 27 December 2022, 16:40
Energy companies have been accused of hoarding nearly £2bn of customer’s money.
The Telegraph said Centrica, which owns British Gas, held about £588m that customers paid in advance, though the company said the cash was ringfenced and would not be used as working capital.
Firms including Octopus and Ovo held more than £100m in customer credit while energy giant Shell held £45m.
Octopus said it does not use customer credit for growth but does use some of the cash to cover bills other consumers have not yet paid.
Shell does use customer credit balances as working capital but does not rely on them, it said.
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Companies are not banned from using their customer’s money, but a report into Ofgem’s performance as a regulator by Oxera, an analysis firm, found some of the energy businesses that collapsed this year were dependant on that money.
Avro and Utility Point were reported to be among the firms where cash paid in advance by customers represented more than 80% of the firms’ total assets.
Ofgem has said companies must announce if customer credit balances make up more than half of their assets.
Christine Farnish, who left Ofgem’s board after an argument over the energy price cap, said: “Energy firms are allowed to put their metaphorical hand into a customer’s pocket and use advance customer payments to fund their own businesses.
“It’s my guess that hard-pressed families have no idea that part of their energy direct debits are used to provide cheap financing for their supplier, rather than actually paying for energy consumed.”
