Households to be shielded more from failed energy supplier costs, says watchdog
Tim Jarvis, director general for markets at Ofgem, said the reforms should 'make sure shareholders do not benefit' when a supplier collapses, before the firm's own customers.
The new rules are part of efforts by the regulator to improve financial resilience across the sector after dozens of firms collapsed when energy prices spiked following the Russian invasion of Ukraine in 2022.
On Tuesday, the regulator launched the new Supplier of Last Resort (SoLR) Levy Offset rule.
It will mean that the costs claimed by energy companies under the SoLR levy, for taking on customers from firms that go out of business, will be the liability of the failed supplier.
Funds will then be recovered through the insolvency process where the collapsed firm has assets which can be used to pay creditors.
Mr Jarvis said: 'Protecting consumers remains our number one priority and the reforms we have implemented since the energy crisis to stabilise the market mean suppliers are better placed to weather any shocks.
'However, like in any healthy and competitive market, energy companies will still fail from time to time and when they do it's right that they cover the costs first, not consumers.
'This new rule will make sure shareholders do not benefit from an insolvency process until the costs of keeping their customers on supply have been covered.'
Earlier this year, Ofgem introduced new rules to make gas and electricity suppliers more financially secure.
Ofgem set a financial buffer to require energy firms hold a certain level of cash to help them withstand disruption in the market and sharp changes in prices.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
.jpeg%3Fwidth%3D1200%26auto%3Dwebp%26quality%3D75%26crop%3D3%3A2%2Csmart%26trim%3D&w=3840&q=100)
Scotsman
7 hours ago
- Scotsman
Energy firms must pay customer transfer costs with new rules
Millions were hit by rising bills when suppliers collapsed. Now there's a safety net ⚡ Sign up to the weekly Cost Of Living newsletter. Saving tips, deals and money hacks. Sign up Thank you for signing up! Did you know with a Digital Subscription to Edinburgh News, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... New Ofgem rules will shift collapse costs from customers to failed energy suppliers Households will no longer fund supplier failures through higher bills Costs will be recovered from the assets of collapsed firms via insolvency The change follows energy market chaos after the 2021–22 price surge It aims to build a more financially resilient and fairer energy market UK energy customers could soon be better protected from the financial fallout when their supplier goes bust, thanks to new rules that aim to shield households from picking up the tab. Energy regulator Ofgem has unveiled reforms that will make collapsed suppliers pay the costs of moving their customers to a new company — a shift that could save households money and bring greater stability to the market. Advertisement Hide Ad Advertisement Hide Ad What's changing? Until now, when a supplier failed, surviving energy companies would be reimbursed through a special levy, often passing the cost onto billpayers. But under the new rule, that financial burden will fall on the failed supplier's remaining assets instead. The changes come in response to the chaos of 2021 and 2022, when dozens of UK energy firms folded during the global energy price spike triggered by Russia's invasion of Ukraine. (Photo: DANIEL LEAL/AFP via Getty Images) | AFP via Getty Images Millions of customers were left in limbo, and the cost of propping up the market ran into the billions — much of which was ultimately covered by consumers through higher bills. How the new rules work From now on, under the new Supplier of Last Resort (SoLR) Levy Offset rule, energy companies that take over customers from a failed firm will no longer automatically claim those costs from the public pot. Advertisement Hide Ad Advertisement Hide Ad Instead, they'll be reimbursed via the failed company's estate — clawing back cash from any remaining assets through the insolvency process. Tim Jarvis, Ofgem's director general for markets, said: 'Protecting consumers remains our number one priority... When [energy companies] do fail, it's right that they cover the costs first — not consumers. 'This new rule will make sure shareholders do not benefit from an insolvency process until the costs of keeping their customers on supply have been covered.' Advertisement Hide Ad Advertisement Hide Ad What it means for you It's the latest in a series of moves by the regulator to tighten up financial oversight of energy firms. Earlier this year, Ofgem introduced new rules requiring suppliers to maintain financial buffers, essentially forcing firms to hold a certain amount of cash to cope with market shocks or price spikes. The reforms aim to prevent the kind of domino-effect collapses seen in recent years, and to ensure that when firms do fold, the cost doesn't land on customers' bills. Ofgem says the changes will help build a more resilient energy market, one where competition can still thrive, but where consumers are protected from the consequences when things go wrong behind the scenes. Advertisement Hide Ad Advertisement Hide Ad Are you struggling to make ends meet as costs continue to rise? You can now send your stories to us online via YourWorld at It's free to use and, once checked, your story will appear on our website and, space allowing, in our newspapers.
.jpeg%3Fwidth%3D1200%26auto%3Dwebp%26quality%3D75%26crop%3D3%3A2%2Csmart%26trim%3D&w=3840&q=100)
Scotsman
10 hours ago
- Scotsman
Energy firms must pay customer transfer costs with new rules
Millions were hit by rising bills when suppliers collapsed. Now there's a safety net ⚡ Sign up to the weekly Cost Of Living newsletter. Saving tips, deals and money hacks. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... New Ofgem rules will shift collapse costs from customers to failed energy suppliers Households will no longer fund supplier failures through higher bills Costs will be recovered from the assets of collapsed firms via insolvency The change follows energy market chaos after the 2021–22 price surge It aims to build a more financially resilient and fairer energy market UK energy customers could soon be better protected from the financial fallout when their supplier goes bust, thanks to new rules that aim to shield households from picking up the tab. Energy regulator Ofgem has unveiled reforms that will make collapsed suppliers pay the costs of moving their customers to a new company — a shift that could save households money and bring greater stability to the market. Advertisement Hide Ad Advertisement Hide Ad What's changing? Until now, when a supplier failed, surviving energy companies would be reimbursed through a special levy, often passing the cost onto billpayers. But under the new rule, that financial burden will fall on the failed supplier's remaining assets instead. The changes come in response to the chaos of 2021 and 2022, when dozens of UK energy firms folded during the global energy price spike triggered by Russia's invasion of Ukraine. (Photo: DANIEL LEAL/AFP via Getty Images) | AFP via Getty Images Millions of customers were left in limbo, and the cost of propping up the market ran into the billions — much of which was ultimately covered by consumers through higher bills. How the new rules work From now on, under the new Supplier of Last Resort (SoLR) Levy Offset rule, energy companies that take over customers from a failed firm will no longer automatically claim those costs from the public pot. Advertisement Hide Ad Advertisement Hide Ad Instead, they'll be reimbursed via the failed company's estate — clawing back cash from any remaining assets through the insolvency process. Tim Jarvis, Ofgem's director general for markets, said: 'Protecting consumers remains our number one priority... When [energy companies] do fail, it's right that they cover the costs first — not consumers. 'This new rule will make sure shareholders do not benefit from an insolvency process until the costs of keeping their customers on supply have been covered.' Advertisement Hide Ad Advertisement Hide Ad What it means for you It's the latest in a series of moves by the regulator to tighten up financial oversight of energy firms. Earlier this year, Ofgem introduced new rules requiring suppliers to maintain financial buffers, essentially forcing firms to hold a certain amount of cash to cope with market shocks or price spikes. The reforms aim to prevent the kind of domino-effect collapses seen in recent years, and to ensure that when firms do fold, the cost doesn't land on customers' bills. Ofgem says the changes will help build a more resilient energy market, one where competition can still thrive, but where consumers are protected from the consequences when things go wrong behind the scenes. Advertisement Hide Ad Advertisement Hide Ad
Reuters
10 hours ago
- Reuters
Indian shares drop on Trump's renewed tariff threats over Russian oil purchases
Aug 5 (Reuters) - Indian shares declined on Tuesday as investors stayed cautious after U.S. President Donald Trump's renewed threat of harsh tariffs on goods from India over the country's purchases of Russian oil and ahead of the local central bank policy decision. The Nifty 50 (.NSEI), opens new tab fell 0.3% to 24,649.55 points and the BSE Sensex (.BSESN), opens new tab lost 0.38% to 80,710.25. Trump on Monday threatened to impose higher tariffs on goods imported from India, prompting New Delhi to call the move "unjustified" and pledge to safeguard its economic interests, further straining ties between the two nations. Twelve of the 16 major sectors declined, with broader small-cap (.NIFSMCP100), opens new tab and mid-cap (.NIFMDCP100), opens new tab indexes down 0.2% and 0.4%, respectively. Yogesh Patil, CIO-equities at LIC Mutual Fund, told Reuters' Trading India forum that he expects U.S. trade uncertainty to keep Indian markets volatile in the short term, but is optimistic about their medium- to long-term prospects given strong domestic fundamentals. Meanwhile, investors are waiting for the Reserve Bank of India's policy decision on Wednesday, in which it is expected to hold its key rate at 5.50%. However, calls for a rate cut have also risen after the U.S. slapped 25% tariffs on goods from India. Reliance Industries ( opens new tab, which is India's largest company by market value and earns the biggest chunk of its revenue from the oil-to-chemicals segment, dropped 1.4% on the day. The drop was fuelled by concerns over the negative impact on the profitability of the firm's refineries due to the potential shift in crude oil sourcing from Russia. State-owned oil refiners slipped on the day as well. Also down were stocks exposed to the U.S. - pharma (.NIPHARM), opens new tab and information technology (.NIFTYIT), opens new tab fell 0.8% and 0.5%, respectively. Private lender IndusInd Bank rose 1.9% after naming industry veteran Rajiv Anand as CEO for a three-year term. Exchange operator BSE ( opens new tab dropped 4.8% after news reports, opens new tab said the finance ministry and the markets regulator are in talks to reduce speculation in the options market.
