(Bloomberg) -- The UK’s biggest energy supplier, Centrica Plc, criticized proposed rules on capital requirements for the sector as reckless and misguided.
The UK regulator outlined regulations Friday requiring energy suppliers to hold a minimum amount of capital to ensure they can withstand volatility in power and gas markets. The firms would have to ring-fence money to buy renewable energy, but customer credit balances wouldn’t have the same protection.
Watchdog Ofgem has been blamed for allowing more than two dozen firms to go bust after surging natural gas prices exposed companies that weren’t protected by buying energy in advance. Customer cash balances were lost when many of these suppliers collapsed because they weren’t kept separate from day-to-day working capital.
Read more: UK Energy Bosses Clash Over How to Protect Customer Cash
“The failure to protect customer balances has already ended up costing consumers hundreds of millions,” Centrica Chief Executive Officer Chris O’Shea said in a statement. “This feels like an abdication of responsibility by a regulator not focusing on the right things.”
Ofgem will consult on the proposals, with the intention to bring them into force in spring 2023, it said in a separate statement.
--With assistance from Elena Mazneva.
©2022 Bloomberg L.P.