What happens when energy suppliers fail to meet their obligations?

The short answer to the title of this blog is: they get fined!

Those fines actually come in the form of "voluntary redress payments". Energy suppliers are required to allocate a certain amount of money (decided by / agreed with Ofgem); this money is earmarked to be spent helping consumers - particularly those who are vulnerable and / or those who were impacted by the supplier's failure to fulfil its obligation.

In reality, this usually means that the energy suppliers pass money on to charities working with these consumer groups, so that they can carry out more directly targeted activity. In many cases, the money is channeled through the Energy Trusts, grant giving charities which are "affiliated" with the energy companies (for example, British Gas Energy Trust). In other cases, money is channeled through larger national charities. Funding often amounts to £20m or more each year.

Ofgem is currently consulting on how these payments are distributed. It may be that there are other routes to ensuring that as much money as possible is routed to those in need.

We've been talking with our friends at Future Climate and we are keen to encourage a modified approach to how voluntary redress payments are made. In particular, we believe that smaller, community based organisations often have stronger relationships with vulnerable householders and may be able to help steer grants and support to those in need, but that these organisations are marginalised in the current system.

We have drafted a consultation response and we would like to encourage you to send it in to Ofgem, if you agree with it, that is!

The closing date for consultation responses is Thursday 24 August, so hurry hurry!

You can read the consultation document at http://bit.ly/29hXG34.

And you can download our response here. Simply copy and paste the questions and answers into your own format, and email it to Keiran Coleman on redress@ofgem.gov.uk.