London Daily

Focus on the big picture.
Friday, Jun 20, 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
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
Trump Organization Launches 5G Mobile Network and Golden Handset
Towcester Hosts 2025 English Greyhound Derby Amid Industry Scrutiny
Gary Oldman and David Beckham Knighted in King's Birthday Honours
Over 30,000 Lightning Strikes Recorded Across UK During Overnight Storms
Princess of Wales Returns to Public Duties at Trooping the Colour
Red Arrows Use Sustainable Fuel in Historic Trooping the Colour Flypast
Former Welsh First Minister Addresses Unionist Concerns Over Irish Language
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
France Bars Israeli Arms Companies from Paris Defense Expo
King Charles Leads Tribute to Air India Crash Victims at Trooping the Colour
Jack Pitchford Embarks on 200-Mile Walk to Support Stem Cell Charity
Surrey Hikers Take on Challenge of Climbing 11 Peaks in a Single Day
UK Deploys RAF Jets to Middle East Amid Israel-Iran Tensions
Two Skydivers Die in 'Tragic Accident' at Devon Airfield
Sainsbury's and Morrisons Accused of Displaying Prohibited Tobacco Ads
UK Launches National Inquiry into Grooming Gangs
Families Seek Closure After Air India Crash
Gold Emerges as Global Safe Haven Amid Uncertainty
Trump Reports $57 Million Earnings from Crypto Venture
Trump's Military Parade Sparks Concerns Over Authoritarianism
Nationwide 'No Kings' Protests Challenge Trump's Leadership
UK Deploys Jets to Middle East Amid Rising Tensions
Trump's Anti-War Stance Tested Amid Israel-Iran Conflict
Germany Holds First Veterans Celebration Since WWII
U.S. Health Secretary Dismisses CDC Vaccine Advisory Committee
Minnesota Lawmaker Melissa Hortman and Husband Killed in Targeted Attack; Senator John Hoffman and Wife Injured
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
×