London Daily

Focus on the big picture.
Tuesday, Dec 23, 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

0:00
0:00
Close
The Pilot Barricaded Himself in the Cockpit and Refused to Take Off: "We Are Not Leaving Until I Receive My Salary"
UK Fashion Label LK Bennett Pursues Accelerated Sale Amid Financial Struggles
U.S. Government Warns UK Over Free Speech in Pro-Life Campaigner Prosecution
Newly Released Files Shed Light on Jeffrey Epstein’s Extensive Links to the United Kingdom
Prince William and Prince George Volunteer Together at UK Homelessness Charity
UK Police Arrest Protesters Chanting ‘Globalise the Intifada’ as Authorities Recalibrate Free Speech Enforcement
Scambodia: The World Owes Thailand’s Military a Profound Debt of Gratitude
Women in Partial Nudity — and Bill Clinton in a Dress and Heels: The Images Revealed in the “Epstein Files”
US Envoy Witkoff to Convene Security Advisers from Ukraine, UK, France and Germany in Miami as Peace Efforts Intensify
UK Retailers Report Sharp Pre-Christmas Sales Decline and Weak Outlook, CBI Survey Shows
UK Government Rejects Use of Frozen Russian Assets to Fund Aid for Ukraine
UK Financial Conduct Authority Opens Formal Investigation into WH Smith After Accounting Errors
UK Issues Final Ultimatum to Roman Abramovich Over £2.5bn Chelsea Sale Funds for Ukraine
Rare Pink Fog Sweeps Across Parts of the UK as Met Office Warns of Poor Visibility
UK Police Pledge ‘More Assertive’ Enforcement to Tackle Antisemitism at Protests
UK Police Warn They Will Arrest Protesters Chanting ‘Globalise the Intifada’
Trump Files $10 Billion Defamation Lawsuit Against BBC as Broadcaster Pledges Legal Defence
UK Says U.S. Tech Deal Talks Still Active Despite Washington’s Suspension of Prosperity Pact
UK Mortgage Rules to Give Greater Flexibility to Borrowers With Irregular Incomes
UK Treasury Moves to Position Britain as Leading Global Hub for Crypto Firms
U.S. Freezes £31 Billion Tech Prosperity Deal With Britain Amid Trade Dispute
Prince Harry and Meghan’s Potential UK Return Gains New Momentum Amid Security Review and Royal Dialogue
Zelensky Opens High-Stakes Peace Talks in Berlin with Trump Envoy and European Leaders
Historical Reflections on Press Freedom Emerge Amid Debate Over Trump’s Media Policies
UK Boosts Protection for Jewish Communities After Sydney Hanukkah Attack
UK Government Declines to Comment After ICC Prosecutor Alleges Britain Threatened to Defund Court Over Israel Arrest Warrant
Apple Shutters All Retail Stores in the United Kingdom Under New National COVID-19 Lockdown
US–UK Technology Partnership Strains as Key Trade Disagreements Emerge
UK Police Confirm No Further Action Over Allegation That Andrew Asked Bodyguard to Investigate Virginia Giuffre
Giuffre Family Expresses Deep Disappointment as UK Police Decline New Inquiry Into Andrew Mountbatten-Windsor Claims
Transatlantic Trade Ambitions Hit a Snag as UK–US Deal Faces Emerging Challenges
Ex-ICC Prosecutor Alleges UK Threatened to Withdraw Funding Over Netanyahu Arrest Warrant Bid
UK Disciplinary Tribunal Clears Carter-Ruck Lawyer of Misconduct in OneCoin Case
‘Pink Ladies’ Emerge as Prominent Face of UK Anti-Immigration Protests
Nigel Farage Says Reform UK Has Become Britain’s Largest Party as Labour Membership Falls Sharply
Google DeepMind and UK Government Launch First Automated AI Lab to Accelerate Scientific Discovery
UK Economy Falters Ahead of Budget as Growth Contracts and Confidence Wanes
Australia Approves Increased Foreign Stake in Strategic Defence Shipbuilder
Former UK Prime Minister Boris Johnson proclaims, “For Ukraine, surrendering their land would be a nightmare.”
Microsoft Challenges £2.1 Billion UK Cloud Licensing Lawsuit at Competition Tribunal
Fake Doctor in Uttar Pradesh Accused of Killing Woman After Performing YouTube-Based Surgery
Hackers Are Hiding Malware in Open-Source Tools and IDE Extensions
Traveling to USA? Homeland Security moving toward requiring foreign travelers to share social media history
UK Officials Push Back at Trump Saying European Leaders ‘Talk Too Much’ About Ukraine
UK Warns of Escalating Cyber Assault Linked to Putin’s State-Backed Operations
UK Consumer Spending Falters in November as Households Hold Back Ahead of Budget
UK Orders Fresh Review of Prince Harry’s Security Status After Formal Request
U.S. Authorises Nvidia to Sell H200 AI Chips to China Under Security Controls
Trump in Direct Assault: European Leaders Are Weak, Immigration a Disaster. Russia Is Strong and Big — and Will Win
"App recommendation" or disguised advertisement? ChatGPT Premium users are furious
×