Ofgem Reminds Energy Firms of Obligations to Protect Consumers from Supplier Failures

The energy regulator Ofgem has reminded energy firms of their obligations to hold on to more cash or assets to reduce the risk of them going bust, following the collapse of more than 20 suppliers when Russia's invasion of Ukraine prompted a spike in wholesale energy costs.

This comes after Ofgem introduced new rules last November to bolster the resilience of business models in the sector.

Ofgem's chief executive Jonathan Brearley warned that financial practices seen before the energy crisis would not be tolerated, and that suppliers must meet essential capital requirements before paying out dividends.

The energy price cap has been reduced from £2,100 to £2,074, and Ofgem expects the household supply sector to return to profit this year after five years of losses.

However, some in the sector have criticized Ofgem's rules for not going far enough in protecting consumers and firms from additional costs in the event of a supplier failure.