Of course it saddens when a company goes bust – dreams, livelihoods and capital all up in smoke, as here at Economy Energy as it closes down for being, well, actually, for being a bit terrible really. This also actually being the point of having a market economy, so that those who are a bit terrible do indeed get chucked out and go bust. That’s the entire mechanism by which we find out who isn’t completely terrible and thus climb the difficult ladder to the current state of glorious wealth for us all.
There are those who get this story entirely wrong though. Even, those who not just write for but even edit our national newspapers – and no, I’m not talking about The Guardian which can be relied upon to get this sort of stuff wrong.[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Lights all go out at Economy Energy after 1,300 complaints[/perfectpullquote]
If people are complaining enough that they stop using the supplier then it not only should but will go bust. Great, we’ve a system that works then:[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] A household energy supplier has become the ninth supplier to fail in a year, less than a week after it was told to stop taking on customers. Economy Energy was banned by Ofgem from taking on new accounts, demanding one-off payments from existing customers or increasing their direct debits due to “unacceptable” levels of service. The regulator said that if the company failed to improve, its licence would be revoked. A note on the company’s website said: “Economy Energy has ceased to trade. Ofgem is appointing a new supplier for its customers.” [/perfectpullquote]
Quite why we need Ofgem in here is unclear, bankruptcy still gets the terrible out of the marketplace. But it’s this which grates so much:[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] One of the biggest problems in the energy market is Ofgem’s failure to regulate properly dozens of new suppliers. Only yesterday, Economy Energy, a supplier with 250,000 customers, became the ninth to fold in 12 months. Why should anyone want to switch if they can’t be sure their new provider will last? After years of ineffective measures such as the price cap, urgent action is needed. The Big Six should be forced to communicate more proactively with customers stuck on the most expensive tariffs to get them to switch. If necessary, they should move them on to better deals. Ofgem must also make good on its promise last year to stop dubious smaller companies from entering the market. [/perfectpullquote]
Nope, we want the dubious smaller suppliers to enter the market. We want people to launch stuff on a wing and a prayer. Because that’s how this difficult stuff of innovation is done. We’ve also already got that sorting mechanism to get rid of those who can’t manage it, or are just a little crap. They go bust.
We don’t need more regulation of the electricity market because we’ve already got regulation by the market. Economy Energy going bust isn’t proof we need regulation it’s proof that we’ve already got regulation.