Managing CDSP Bad Debt and Customer Failures
Explore the scenario of CDSP bad debt, customer failures, and debt recovery procedures. Learn about failed customers, supplier and shipper failures, and the impact on the market. Understand the rules and methodology for managing credit in CDSP operations.
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Presentation Transcript
Background Currently there is in the region of 53.5k* of CDSP bad debt due to a number of CDSP customers failing in recent years. Shippers Utility Professional Business Operations and Better Energy who were UNC Shippers terminated from the market account for 39,035.45* of the debt. Where a Shipper fails the Supplier Deed of Undertaking is triggered allowing the registered Supplier to be charged for Energy and Transportation (in line with SLC18 and the Gas Act) but DSC is not covered. Where debt is greater than 1k (excluding VAT) then a proof of debt is lodged with the Insolvency Practitioner (as agreed with the DSC Credit Committee) to recover some/all of the debt. * Position at 12/05/20
As agreed with the DSC Credit Committee any debt <1k ex VAT will not be pursued with administrators. Failed Customers Customer Short Code Customer Name Total Debt User Type Administrator Claim Better Energy Supply Limited BTE 1,815.73 Yes Shipper (Failed Dec 2019) - 1,648.80 (General Services) - 166.93 Specific Services Breeze Energy Supply Limited BZE 241.57 Supplier (Failed Dec 2019) Third Party No Brilliant Energy Supply Limited BEY 162.43 Supplier (Failed Mar 2019) Third Party No Cardiff Energy Supply Limited CRD 13.86 Supplier (Failed Aug 2019) Third Party No Economy Energy Trading Limited ENY 1,651.39 Supplier (Failed Jan 2019) Third Party Yes Eversmart Energy Limited ENQ 1,886.86 Supplier (Failed Sep 2019) Third Party Yes Future Energy (Supply Limited) FES 352.36 Supplier (Failed Jan 2019) Third Party No GB Energy Supply Limited GBE 5,246.44 Supplier (Failed Dec 2016) ** PRE DSC ** Yes Gnergy Limited GHL 73.92 Supplier (Failed Mar 2020) Third Party No Iresa Limited IRE 658.75 Supplier (Failed Aug 2018) Third Party No One Wales Energy WAL 9.02 Supplier (Failed Oct 2018) Third Party No One Select Limited ONE 1.082.89 Supplier (Failed Dec 2018) Third Party No Our Power Energy Supply Limited OUP 1,773.22 Supplier (Failed Feb 2019) Third Party Yes Rutherford Energy Supply Limited RUT 29.34 Supplier (Failed Oct 2019) Third Party No Snowdrop Energy Supply Limited SNO 329.38 Supplier (Failed Nov 2018) Third Party No Solarplicity Supply Limited LOC 2,037.42 Supplier (Failed Aug 2019) Third Party Yes Temple Energy Limited TEM 44.62 Supplier (Failed Mar 2020) Third Party No Usio Energy Supply Limited USI 9.02 Supplier (Failed Oct 2018) Third Party No Utility Professional Business Operations Limited UPB 37,219.72 Yes Shipper (Failed Nov 2018) - 23,080.58 General Services - 14,139.14 Specific Services
As agreed with the DSC Credit Committee any debt <1k ex VAT will not be pursued with administrators. Failed Customers Summary Total Failures Total Debt Administrator Claims Unclaimed 19 53,555.05 51,630.78 1,924.27 Supplier Failures Supplier Debt Administrator Claims Unclaimed 17 14,519.60 12,595.33 1,924.27 Shipper Failures Shipper Debt Administrator Claims Specific Services General Services 2 39,035.45 Yes 24,729.38 14,306.07
Credit Rules v Budget and Charging Methodology CDSP Credit Rules and Budget and Charging Methodology are not aligned. Credit Rules state under section 2.2: the effect of the provisions of the Budget and Charging Methodology Document is that if Customers fail to make payment of any invoice issued when due, all other customers shall become liable for (in aggregate) for an equivalent amount (together with an amount in respect of the cost of financing such non-payment) Budget and Charging Methodology document is silent on how this is done. Should only customers within the failed customers constituency pick up the failed customer charges?
Options Write off debt which is not pursued through Administrators Smear all General Services debt across the failed users constituency (over 1k) at the end of the financial year. Smear all debt across all customers in line with 2.2 of the Credit Rules at the end of the financial year. Create a bad debt provision within the accounts. Suppliers to lodge Letter of Credit or PCG to cover exposure rather than existing unsecured credit rating. Look at whether the Supplier Deed of Undertaking could incorporate DSC charges (but as it is linked to Supplier Licence Condition 18 and the gas act we believe that this would be difficult to do.)
Next Steps Seek view of the DSC Contract Management Committee on the preferred option(s) Share preferred option with DSC Credit Committee Align Budget and Charging Methodology with DSC Credit Rules Implement option(s)
