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Finance

‘Ofgem’s spending on consultants since start of crisis amounts to £32m’

Britain’s energy regulator has paid out millions to consultants in a bid to address energy supplier collapses and Supplier of Last Resort (SoLR) costs.

According to Tussell, a firm which tracks government contracts, Ofgem has spent £32 million on consultants since the start of the energy crisis.

Baringa has been awarded a six-month contract valued at £330,000 to assist with SoLR payments – expenses incurred by energy suppliers who step in when another firm goes bust.

KPMG is among the other consultants that have been contracted by Ofgem, earning nearly £2.5 million for five contracts, according to the report.

In 2021 and 2022, 31 energy firms collapsed, leaving household customers to bear the costs of nearly £3 billion via a levy added to their bills.

The National Audit Office predicts that SoLR claims will total around £2.7 billion, with Bulb’s failure, the largest of the energy suppliers to go bust, incurring an additional cost yet to be determined.

An Ofgem spokesperson told ELN: “The SoLR process was not used in many cases before the gas crisis hit and the teams in place were appropriate to that use, however, due to the sheer scale of the once in a lifetime gas crisis it was necessary to bolster the workforce quickly and, by using consultants, we were able to do this without permanently increasing our head count.

“Ofgem have put in place further protections to create a more resilient market that can better withstand the shocks, this has meant there have been no further failures this winter.”

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