Following the recent surge in wholesale energy prices, we are seeing increasing numbers of energy supplier insolvency in the news and customers are finding themselves transferred to new providers. 

When a supplier fails, its customers are usually transferred by Ofgem to a new energy provider (known as a Supplier of Last Resort). Where Ofgem is unable to identify an appropriate Supplier of Last Resort, the supplier can instead be placed into an Energy Supply Company Administration. This is a special administration regime targeted at ensuring the continued trade of large energy supply companies in financial distress, potentially with some Government financial assistance. It has not yet been utilised in relation to any energy providers, but watch this space if energy prices continue to soar.

Insolvency practitioners (IPs) dealing with insolvent energy providers have faced criticism by Ofgem for failing to promptly finalise customer bills and collect debts. However, IPs are often parachuted into a failing company with limited notice or prior knowledge of the business, its systems or the customer base. The records inherited can be incomplete and IPs may have no support or cooperation from company staff or directors. They are also at the mercy of the new supplier providing meter readings to issue final bills and the insolvent entity's own systems to produce them. 

Over the coming months, we anticipate further insolvencies in the energy sector and many more customers will find themselves transferred to new suppliers. The energy sector is set to be an increasing source of business for IPs and customers may need to anticipate a few bumps in the road on any transition to a new provider.