Failed energy suppliers to meet costs of customer transfer

Failed energy suppliers will be liable for the costs of transferring their customers to new firms under measures announced by Ofgem.

Under the Supplier of Last Resort (SoLR) Levy Offset rule the costs will be recovered through the insolvency process where the failed supplier has residual assets available to pay creditors.

Ofgem stressed that although the market is becoming much more resilient “some companies will still fail from time to time”.

Tim Jarvis, Director General, Markets, at Ofgem said: “This new rule will make sure shareholders do not benefit from an insolvency process until the costs of keeping their customers on supply have been covered.”

The introduction of the SoLR Levy Offset follows a series of interventions by the regulator to drive up financial resilience in the market, including the introduction of minimum capital target rules and rules giving Ofgem the power to direct suppliers to ringfence customer credit balances when in the consumer interest.