The watchdog is still proposing a requirement for suppliers to hold capital reserves and will seek feedback on the plans it hopes to publish in spring 2023, it said.
Ofgem’s chief executive, Jonathan Brearley, said the energy crisis, caused by soaring wholesale gas prices this year, had profoundly impacted the sector and its business models.
“These proposals will provide protections, checks and balances for consumers, suppliers and the entire sector to create a more stable market,” he said.
Ofgem wanted well capitalised businesses that can weather price fluctuations, he said, but it did not want to block new suppliers or “force suppliers to sit on lots of capital they could be investing in innovative ideas”.
Centrica, the owner of Britain’s largest energy supplier British Gas, said dropping the proposal for customers’ credit balances felt like an “abdication of responsibility by a regulator not focusing on the right things”.
“They would be appalled to learn their money was being used to fund day to day business activities, but that’s exactly what’s happening in some companies, and it undermines confidence in the market.”
He added that “if and when a large supplier fails, the recklessness of the decision not to address this issue will be clear for all to see”.
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