Last Resort Supply Payment claims minded-to positions 2023
Consultation
- Upcoming
- Open
- Closed (awaiting decision)
- Closed (with decision)
- Publication date
- Closed date
- Industry sector
- Supply and Retail Market
Following the appointment of a Supplier of Last Resort (SoLR), Ofgem manages an industry process which enables the supplier to seek to recover additional costs they face in supplying the transferred customers. This is known as a Last Resort Supply Payment (LRSP). Doing so ensures suppliers continue to come forward to act as SoLRs, and it is through this mechanism that customer credit balances are protected when a supplier fails. LRSPs are paid for by the relevant gas and electricity network operators, who then recover the cost through charges to suppliers.
We expect the SoLR to demonstrate the steps it has taken to minimise these costs, for example by seeking to claim credit balances from the administrator of the failed supplier. Ofgem decides on a case-by-case basis whether it is in consumers’ interests to grant our consent to recover costs.
In December 2021 we made temporary changes to the process for a SoLR to make a claim for an LRSP. The temporary process allows SoLRs that had been appointed since 1 September 2021 to submit an initial claim for immediate costs incurred, and subsequent ‘true-up’ claims for additional costs.
Following our decisions in 2021 and 2022 on claims submitted by SoLRs as part of this temporary process, we have now assessed further subsequent LRSP claims made by these SoLRs and have published our minded-to position on each of the claims received by Ofgem. Our assessment was carried out against the relevant licence conditions and/or our criteria and methodology to determine that the costs are additional, directly incurred as part of the SoLR role, otherwise unrecoverable, and economic.
Respond name
Melissa Giordano