New plans to ensure consumers continue to receive an uninterrupted supply of energy if a supplier goes bust have been published.
A Memorandum of Understanding (MoU) has been developed setting out the details of how the Department for Business, Energy & Industrial Strategy (BEIS), Ofgem and the Treasury will work together in such an event.
Energy Supply Company Administration is a special administration regime for large energy supply companies.
It ensures uninterrupted and safe operation of essential services in the event of a large energy supplier going under administration.
The MoU aims to ensure the overall stability of the gas and electricity markets while also considering the impact on taxpayers and energy bills.
The document states: “It is a contingency measure in case Ofgem is unable to appoint a Supplier of Last Resort, which is used when a smaller energy supplier becomes insolvent. The special administrator, unlike an ordinary administrator, has an obligation to consider consumers’ interests as well as creditors.”
Ofgem has arrangements in place to monitor the financial health of energy supply companies, which includes collecting market performance information, reviewing market indicators and requesting information from companies if necessary.
It also has the power to revoke a supply licence and appoint a Supplier of Last Resort to take on that company’s customers in certain circumstances.