Small Supplier Iresa Collapses

Embattled energy firm Iresa has folded, amid record customer service complaints and Ofgem censure.

The collapse comes just a month after the budget supplier notched the worst ever customer service rating in Citizen Advice’s rankings of British energy firms: 0.35 stars out of five. The consumer watchdog recorded 9,000 complaints from Iresa’s 100,000 subscribers between January and March of this year, five times more than complaints registered about the next-worst supplier, TOTO.

Iresa had been prohibited from signing up new customers since March, under a provisional order from energy regulator Ofgem that was extended in June.

Ofgem will appoint a new energy firm to take over Iresa’s customers, a process known as supplier of last resort. The cost of the appointment will be felt across all energy bills. The failure of GB Energy in 2016 and subsequent assignment of its customers to Co-op Energy, cost in excess of £14 million.

Ofgem emphasised that supply will continue uninterrupted for former Iresa customers, who should wait to be contacted by their new provider, and that their outstanding credit balances would be protected by the regulator’s safety net. Ofgem urged households served by Iresa to take prompt meter readings, however, and Citizens Advice warned that switching supplier now could deprive Iresa customers of refunds owed to them.

Iresa’s collapse has renewed calls for stricter regulation on new energy market entrants, particularly as wholesale energy prices have surged. Iresa is the forth energy firm to fail this since 2016 and the third this year, after the shuttering of small suppliers Better Energy World and Future Energy over the winter.

Those closures and poor customer service standards among the small suppliers has led Citizens Advice to urge a tightening of Ofgem licensing regimes. Ofgem must “stop unprepared suppliers from entering the market, and take poorly performing companies out of the market faster,” said Gillian Guy, the watchdog’s chief executive said in June.

Ofgem is conducting a review of its licensing process. New rules are expected to reverse some of the 2004 changes that enabled upstart firms to challenge the Big Six’s market dominance. There are now 65 energy firms supplying British households. Market share of the Big Six has fallen to around 80% and a fifth of customers are supplied by competitors.

Increased competition in the market has produced lower bills for some—Iresa was widely known for its bargain supply—but frustration and expense for others, as customers struggle to contact and receive help from their suppliers and the cost of failing firms hits all households.

“It is vital now that Ofgem does more to protect consumers from poor customer service,” Guy said.

Iresa’s website offered no apology but told customers they “need not worry” and that “their supplies are secure and credit balances are protected.”

Lauren Smith

Lauren Smith has worked as a journalist and copywriter for most of the last decade, covering technology, energy, and consumer rights, in the US and UK.

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