Arab Press

بالشعب و للشعب
Saturday, May 31, 2025

Energy crisis: Ofgem faces legal hearing over bust suppliers' millions

Energy crisis: Ofgem faces legal hearing over bust suppliers' millions

A case involving top insolvency practitioners could determine Ofgem's right to rank as a senior creditor in the insolvencies of dozens of energy companies.

The energy regulator's ability to claim hundreds of millions of pounds from the remnants of collapsed suppliers is facing a legal intervention brought by top insolvency professionals.

Sky News has learnt that three leading firms of administrators are seeking a court ruling to determine where Ofgem should rank as a creditor in the collapses of a trio of gas and electricity companies.

City sources said that a directions hearing due to take place in London on Thursday would be of "huge importance" in determining whether billpayers face yet higher costs at a time of already-soaring prices.

The three insolvency practitioners - Alvarez & Marsal, Grant Thornton and Teneo Restructuring - are understood to be seeking a determination on Ofgem's rights to claim outstanding Renewables Obligation Certificate payments from administrators.

Ofgem is the regulator for the UK' energy sector


More than two dozen suppliers have gone bust since last August, forcing millions of UK households to switch energy suppliers.

The largest, Bulb Energy, fell into a regime called special administration, meaning it was taken over by the government and funded by taxpayers until its assets can be sold.

All of the other collapsed suppliers - the largest of which was Avro Energy, with more than 500,000 customers - became insolvent, with their customer bases taken on under a mechanism known as the Supplier of Last Resort (SOLR).

Insiders said on Wednesday that this week's court hearing was also likely to determine whether the energy companies that had taken on customers through the SOLR system were entitled to file claims for customer balances.

Ofgem is understood to be a participant in the hearing, while British Gas, which is owned by Centrica, is also said to have been involved in the proceedings at an earlier stage.

The hearing is significant because it could set a precedent for how Ofgem is treated as a creditor in the insolvency proceedings of many of the more than 25 suppliers which have failed in the last six months.

Any direction issued by the court could therefore have an impact on whether Ofgem has the right to claim sums estimated to be worth hundreds of millions of pounds or whether those costs might have to be absorbed by the rest of the sector.

One source said the need for the legal hearing highlighted a major gap in Britain's energy sector regulation and said that those who devised it had failed to take into account the possibility of a large number of supplier failures.

On Wednesday, Ofgem said it would introduce two short-term measures in an attempt to help stabilise the UK retail energy market.

The regulator will force suppliers to offer existing customers the same tariffs as new ones, while suppliers will also have to pay peers a charge when they take on one of their customers, but only if wholesale energy prices fall sharply.

"Alongside tougher financial regulation, this will make sure that energy companies do not take disproportionate financial risks and suppliers who have done the right thing by purchasing energy in advance for their customers aren't penalised," an Ofgem spokesperson said.

The rise in gas and electricity charges, which will see the industry cap on average household prices soar by more than 50% to a maximum of £1,971 in April, has sparked urgent government intervention.

Earlier this month, Rishi Sunak, the chancellor, announced a £350-per-household support package to tackle the rising energy prices - a move that was criticised both as inadequate and poorly targeted.

Ofgem itself has been stung by criticism from a multitude of stakeholders about its handling of the crisis.

Jonathan Brearley, the watchdog's chief executive, told MPs this month that it should have been "more careful" about the financial resilience of new suppliers entering the market.

Some industry observers now expect the government to seek to reform or abolish Ofgem in its current form ahead of the next general election.

Centrica did not respond to several requests for comment about Thursday's court hearing, while the three sets of administrators all declined to comment.

Ofgem told Sky News: "We do not comment on ongoing legal proceedings".

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
Head of Gaza Aid Group Resigns Amid Humanitarian Concerns
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Netanyahu Accuses Starmer of Siding with Hamas
Calls Grow to Resume Syrian Asylum Claims in UK
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Denmark Increases Retirement Age to 70, Setting a European Precedent
Iranian Director Jafar Panahi Wins Palme d'Or at Cannes
Israeli Airstrike Kills Nine Children of Gaza Doctor
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
Mount Lewotobi Laki-Laki Erupts Again, Spewing Ash Cloud over Flores Island
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
Senate Democrats Move to Censure Trump Over Qatar Jet Gift
Hamas Releases Last Living US Hostage from Gaza Amid Ongoing Conflict
×