Last Resort Supply Payment claims minded-to positions 2025

Details of outcome

Following the appointment of a Supplier of Last Resort (SoLR), Ofgem manages an industry process which enables the SoLR to seek to recover additional costs faced 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 SoLRs to demonstrate the steps taken to minimise these costs. 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 LRSP claims. 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. If our assessment finds that an overpayment has been made in a previous claim, the SoLR is required to repay the excess through the same industry processes. In August 2025, we implemented licence changes to make this multi-claim process a permanent feature of the regulatory framework.
 
Ofgem received claims from a number of  SoLRs ahead of this year’s deadline of 15 July 2025. We published minded-to positions on these claims for consultation on 18 August 2025.
 
We have now published our final decisions on these claims. 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. We have also been informed of recoveries from the liquidation processes of failed suppliers and determined that repayments to the relevant gas and electricity operators should take place.

The publications include our decision and consent documents, and necessary directions to SoLRs and industry parties to enable the relevant payments to take effect.

Read the full outcome

Original consultation

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 SoLRs to demonstrate steps taken to minimise costs. 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, 2022, 2023 and 2024 on claims submitted by SoLRs as part of this temporary process, we have now assessed further subsequent LRSP claims made by 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.

Consultation documents