Cost of supplier failures falls

New rules to strengthen the financial resilience of the sector has cut the cost impact of supplier failures, according to figures released by Ofgem.

The regulator said the cost of protecting credit balances when a supplier fails, which is shared by all billpayers, had fallen from a peak of £64 per year in 2022/23 to zero in 2025/26.

In response to the failures seen during the energy crisis, Ofgem introduced new rules so suppliers are more financially secure and prepared for future volatility.

Across the sector suppliers have moved from net negative assets during the crisis to positive adjusted net assets of £7.5 billion, according to the regulator’s latest financial resilience transparency report.

“This reduces the chance of suppliers going out of business in the future and lowers the cost to consumers when suppliers exit the energy market,” said Ofgem.

“Our new rules make sure that suppliers put their own capital at risk and that they are not overly relying on their customers’ money to fund their business.”