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A Memorandum of Understanding has been published by OFGEM stating how they and the Government would work together to make sure households continue to receive an uninterrupted supply of energy in the event of a large energy supplier going into administration.
Energy Supply Company Administration is a special administration regime for large energy supply companies. It ensures uninterrupted and safe operation of essential services in the event of a large energy supply company becoming insolvent.
It is a contingency measure in case Ofgem is unable to appoint a Supplier of Last Resort, which is used when a smaller energy supplier becomes insolvent. The special administrator, unlike an ordinary administrator, has an obligation to consider consumers’ interests as well as creditors.
Provisions for this administration scheme for energy suppliers were included in the 2011 Energy Act. It has never been used before because a large energy supplier has never been insolvent.
A copy of the Memorandum of Understanding setting out the detail of how the three organisations: Department for Business, Energy & Industrial Strategy (BEIS), Ofgem and HM Treasury will work together can be found on the OFGEM site by clicking HERE.
