Ofgem has permitted Ovo Energy to recoup £711,000 of costs incurred as result of SSE’s appointment as the supplier of last resort for Brilliant Energy.
Brilliant Energy ceased trading in March 2019 and shortly afterwards SSE was appointed supplier of last resort for its 17,000 customers. The claim for expenses was made by Ovo Energy following its acquisition of SSE’s retail business for £500 million in September 2019.
Ovo made a total claim for £1.475 million in costs, including £756,000 for the recovery of credit balances, £498,000 for IT and operational costs and £84,000 in administrative costs. The company said it would cover around £650,000 but requested to receive £825,000.
In both its minded-to and final decision, Ofgem accepted most of these costs but denied Ovo’s request for £114,000 to cover uncollected bills for the 2,800 customers who had already switched to alternative supplier.
As they elected to switch, Ovo was unable to source their full details but remained their registered supplier whilst the process was completed. Ovo said it was eventually able to find enough information to bill around 500 customers but only received half of what was owed. It said it did not expect to be able to collect any more and estimated the remaining shortfall at £114,000.
Ofgem said it advises customers not to switch until their transfer to a supplier of last resort is completed but they are nevertheless free to do so. It said suppliers should take this risk into account when bidding to become a supplier of last resort.
The £711,000 that Ovo has been permitted to receive will be recovered from customers through charges for gas and electricity distribution networks.