A city company has been put on hold to take control of a large power company amid fears that one could soon collapse, overwhelming the existing safety net established by regulator Ofgem.
Management consulting firm Teneo is understood to have held talks with the regulator to act as a “special administrator” under a government scheme, as yet unproven, to handle the failures of large energy companies.
In theory, the company would take over the operations of a failed power supplier to ensure that service or supply to customers is not interrupted.
The backup option, first reported by Sky News, is being readied in light of growing concern that Ofgem’s “Provider of Last Resort” system, under which a healthy energy provider agrees to accept customers from a rival collapsed, is at a breaking point.
Three more energy companies collapsed on Wednesday, bringing the total number of failures to 12 this year, in a deepening crisis that has forced Ofgem to seek new providers for more than 2.2 million customer accounts.
The record gas prices that triggered the crash wave also make it less attractive for surviving suppliers to take over these customers.
This is because the maximum price of energy means that they are effectively asked to acquire customers who will pay less than the current price of gas.
While suppliers can ultimately claim back their costs, through an industry tax, some of these companies are rumored to have sought legal advice on how to evade their obligations under the last resort regime.
A spokesperson for Ofgem declined to comment specifically on whether Teneo had been appointed as a special administrator.
They said: “Ofgem and the government prepare for a wide range of scenarios and have long-standing contingency plans for any situation as required. These processes include speaking with a variety of organizations. “
Teneo did not respond to requests for comment.
The customer transfer system is also generating higher bills for households whose accounts are transferred.
A Citizens Advice report, released Thursday, found that consumers moving to a new provider typically pay £ 30 a month more than before.
Advisers to the charity warned that many will face energy poverty this winter and could end up turning off their refrigerators and freezers, relying on hot water bottles for heating, and requesting support to buy extra duvets and blankets.