Ofgem is preparing for a looming failure of a leading energy supplier | energy industry

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A city company has been put on standby to take over a major energy company amid fears that one of them may soon collapse, overshadowing the current safety net put in place by the regulator, Ofgem.

Management consultancy Teneo is understood to have held talks with the regulator about serving as a “special official” under a government scheme, which has yet to be tested, to deal with failures of large energy companies.

In theory, the company would take over the operations of a failing power supplier to ensure that service or supply to customers would not be interrupted.

The backup option, first reported by Sky News, is being prepared in light of growing concern that Ofgem’s “provider of last resort” system, under which a healthy energy supplier agrees to take on customers from a collapsed competitor, is on the verge of collapse.

Three more energy companies collapsed on Wednesday, bringing the total number of failures to 12 this year, in a deep crisis that has forced Ofgem to find new providers for more than 2.2 million customer accounts.

The record gas prices that caused the wave of crashes also make it less attractive for surviving suppliers to meet these customers.

This is because the energy price cap means that they are effectively required to acquire customers who will pay less than the current price of gas.

While suppliers can eventually claim reimbursement for their costs – through an industrial tax – some of these companies are rumored to have sought legal advice on how to get around their obligations under the last resort regime.

A spokesperson for Ofgem declined to comment specifically on whether Teneo had lined up as a special official.

They said: “Ofgem and the government prepare for a wide range of scenarios and have long-term contingency plans in place for any situation as needed. These processes include talking to a range of organizations.”

Teneo did not respond to requests for comment.

The customer transfer system also results in higher bills for families whose accounts are being transferred.

A report by Citizens Advice, published on Thursday, found that consumers who have moved to a new supplier typically pay £30 more per month than before.

Counselors at the charity have warned that many will face fuel shortages this winter and may end up shutting down their refrigerators and freezers, relying on hot water bottles for warmth and asking for support to buy extra quilts and blankets.

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