Electricity suppliers may have to put up a bond

Suppliers entering the competitive electricity market may have to put up a bond similar to that operated by ABTA in the travel industry to protect customers and trade creditors if they go bust.

The idea was canvassed yesterday by Professor Stephen Littlechild, the electricity regulator, as a way of spreading the debts of defaulting suppliers across the industry.

The size of the bond would relate to the supplier's market share and would help pay industry creditors and householders who could be owed money when their supplier went under.

A consultative document issued by Professor Littlechild suggests that the bond should be large enough to cover the costs of providing an electricity supply for at least one month. However, it leaves open questions such as the actual size of the bond.

The paper comes amid growing speculation that the Government is about to announce a delay of up to six months in the start of competition for domestic customers.

Householders are due to be allowed to start shopping around for a supplier from April but computer problems and the slowness of some regional electricity companies in gearing up for competition, mean that the start date may have to be put back to September.