Energy customers could see a small increase in gas and electricity bills if a supplier goes bust.
Ofgem’s new rules allow rescue suppliers to add a charge on consumer bills to help reimburse those customers who have been affected by the bankrupt firm.
The “safety net” is aimed at providing consumers “peace of mind so they can have complete confidence to shop around for the best deal”.
In the unlikely event of a supplier going out of business, the regulator appoints a replacement company to ensure customers continue to be supplied with energy. However there may also be a risk to customers’ money if their account is in credit.
As direct debit payments spread the cost evenly throughout the year, customers typically build up credit during summer which might peak at just above £100. This credit covers the cost of consumers using more energy during the winter.
As unsecured creditors, these customers are unlikely to get their money back if their supplier becomes insolvent.
However, under the new regulations, Ofgem will take into account who can best protect consumers’ credit balances as part of the process for selecting a replacement supplier.
The regulator has also announced more customers in vulnerable situations, including those with mental health issues, will receive extra help under new changes.