TIMES.KY

Cayman Islands, Caribbeanand International News
Tuesday, Mar 28, 2023

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

TIMES.KY
Close
0:00
0:00
Brand new security footage has just been released to the public showing the Active shooter Audrey Elizabeth Hale drove to Covenant Church School in her Honda Fit this morning, parked, and shot her way into the building
AMERICA, 2023
U.S. charges FTX's Bankman-Fried with paying $40 million bribe
Fallen 'Crypto King' Who Owes Millions to Investors Was Kidnapped and Tortured
Regulators blame social media for SVB's rapid collapse: 'Complete game changer'
AOC explains why she opposes banning TikTok
UK: Humza Yousaf replaces Nicola Sturgeon as SNP leader and first minister in Scotland
In a dramatic U-turn against His Government: Judicial Reform Legislation Must Be Halted, Says Israeli Defense Minister Yoav Gallant
Gordon Moore, a co-founder of Intel Corporation, died at 94
Powell: Silicon Valley Bank was an 'outlier'
Donald Trump arrested – Twitter goes wild with doctored pictures
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Home Secretary Suella Braverman tours potential migrant housing in Rwanda as asylum deal remains mired in legal challenges
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
Credit Suisse to borrow $54 billion from Swiss central bank
Russian Hackers Preparing New Cyber Assault Against Ukraine
Jeremy Hunt insists his Budget will get young parents and over-50s back into work
If this was in Tehran, Moscow or Hong Kong
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
Mexican President Claims Mexico is Safer than the U.S.
A brief banking situation report
Lady bites police officer and gets instantly reaction
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
BBC Director General, Tim Davie, has apologized, but not resigned, yet, following the disruption of sports programmes over the weekend
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
Senator Tom Cotton: If the Mexican Government Won’t Stop Cartels from Killing Americans, Then U.S. Government Should
Banking regulators close SVB, the largest bank failure since the financial crisis
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
It's the question on everyone's lips: could a four-day workweek be the future of employment?
Is Gold the Ultimate Safe Haven Asset in Times of Uncertainty?
Spain officials quit over trains that were too wide for tunnels...
Don Lemon, a CNN anchor, has provided a list of five areas that he believes the black community needs to address.
Hello. Here is our news digest from London.
Corruption and Influence Buying Uncovered in International Mainstream Media: Investigation Reveals Growing Disinformation Mercenaries
Givenchy Store in New York Robbed of $50,000 in Merchandise
European MP Clare Daly condemns US attack on Nord Stream
Former U.S. President Carter will spend his remaining time at home and receive hospice care instead of medication
Tucker Carlson called Trump a 'demonic force'
US Joins 15 NATO Nations in Largest Space Data Collection Initiative in History
×