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Ofgem has provisionally approved more than £426 million of Last Resort Supply Payment claims by Suppliers of Last Resort (SoLRs).
They largely consist of true-up claims by companies which had previously received approval to claw back around £1.8 billion of SoLR costs as part of a temporary expedited process launched by the regulator last year following a raft of supplier failures.
Last Resort Supply Payments allow companies to recoup otherwise unrecoverable costs incurred by becoming an SoLR, including wholesale costs, credit balances and working capital. The payments are made by electricity and gas distribution networks, which then recoup the costs through their charges.
The temporary process introduced by Ofgem last year applied to SoLRs appointed after 1 September 2021, which were allowed to submit initial claims for costs incurred prior to December 2021 and later make true-up claims for any additional costs.
After approving almost £1.8 billion of initial claims in December last year, Ofgem has now issued its minded-to decisions on a number of true-up claims, as well as several new claims for SoLRs appointed prior to the introduction of the temporary process.
Seven companies – British Gas, Eon Next, EDF, Scottish Power, Shell, Octopus and Utilita – made claims for costs incurred in taking on the customers of 23 failed suppliers, collectively requesting almost £598 million.
In its minded-to decisions, Ofgem made deductions of more than £171 million, provisionally allowing the SoLRs to claim back more than £426 million of costs.
Shell is set to be the largest recipient of true-up payments after the company requested more than £258 million and received preliminary approval for almost £183 million. This is in addition to the nearly £362 million of initial claims that were approved by Ofgem in December last year.
However, Octopus is expected to remain the largest recipient of Last Resort Supply Payments over the whole of the expedited process. The company had already received approval for an initial claim for more than £692 million for its takeover of Avro and has now received provisional approval to claim back another £36 million as part of the true up.
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