The government has said it is ready to implement a “special administrator” in the event of a large energy supplier exiting the market.
The Department for Business, Energy & Industrial Strategy issued a statement last night (18 September) following talks with senior energy executives over the impact of soaring wholesale power prices.
Secretary of state, Kwasi Kwarteng, is to meet Ofgem this morning “to discuss the issues raised by the industry in more detail” and will convene a roundtable tomorrow “to plan a way forward”. Kwarteng also said he was “in contact with colleagues across government to manage the wider implications of the global gas price increase”.
He insisted that security of supply was not a cause for immediate concern within the industry.
His statement acknowledged the pressures faced by energy companies and pointed to “robust measures in place” to protect customers in the face of a supplier exiting the market. It also directly addressed the fears within the sector that the Supplier of Last Resort process would not cope with the failure of a large supplier.
It said: “If the appointment of a Supplier of Last Resort is not possible, Ofgem and the Government have agreed processes in place to appoint a special administrator to temporarily run the business until such time as a new supplier can be found for the customers.”
Today, I’ve held a series of individual meetings with senior executives from the energy industry to discuss the impact of high global gas prices.
I was reassured that security of supply was not a cause for immediate concern within the industry. (1/7)
— Kwasi Kwarteng (@KwasiKwarteng) September 18, 2021
The statement went on to say: “The Secretary of State also stressed the importance of protecting vulnerable customers during a time of heightened global gas prices. Government initiatives such as the Warm Home Discount, Winter Fuel Payments and Cold Weather Payments will help ensure those most vulnerable are better able to heat their homes over the colder months. The Energy Price Cap is also in place to protect millions of customers from the sudden increases in global gas prices this winter.”
Meanwhile, “industry sources” have told the BBC that four of the smaller energy retailers have asked larger players to bid to take over the supply to one million customers.
Read Utility Week’s analysis of the pressure facing the energy retail sector here.