The chief executive of British Gas, a major energy company, has criticized its competitor Octopus, suggesting that it should be prevented from acquiring new customers. Chris O’Shea expressed dissatisfaction with the regulatory body Ofgem for not taking a stricter approach to enforcing rules aimed at reducing the risk of energy suppliers going bankrupt.
O’Shea’s remarks come after Octopus, a relatively new player in the market, surpassed British Gas as the largest residential energy provider in the UK six months ago. He also condemned customers who fail to pay their bills, stating that this behavior unfairly burdens responsible individuals.
Following the collapse of nearly 30 domestic energy suppliers due to surging wholesale gas prices following Russia’s invasion of Ukraine in 2021, Ofgem introduced new financial safeguards in April to mitigate potential market shocks.
Although Octopus Energy, now the leading supplier in the UK, was one of three companies that initially did not meet the requirements, it has since devised a plan with Ofgem to address this issue. Meanwhile, British Gas and most other suppliers have complied with the regulations, with approximately £900 million of funds set aside for emergencies.
O’Shea emphasized the importance of suppliers meeting capital requirements to prevent systemic failures and suggested that those failing to comply should not be allowed to attract new customers. He stressed the need for Ofgem to enhance its oversight and enforcement efforts to prevent future crises.
In response to the industry dynamics, Ofgem highlighted the significant improvement in the financial stability of the energy sector, with strengthened net assets serving as a buffer against potential losses. The regulator emphasized that suppliers with credible plans to meet capital targets, even if currently below the threshold, are being closely monitored and expected to adhere to restrictions.
British Gas reported a halt in customer attrition, with the number of customers stabilizing at 7.5 million. However, the company faced criticism in the past for its debt collection practices, including aggressive tactics targeting vulnerable individuals struggling with bills.
Despite a decline in profits for British Gas due to decreased demand amid warmer weather, the broader Centrica business reported underlying profits at £549 million, down from over £1 billion in the previous year. This financial performance reflects the ongoing challenges and competition within the energy industry.