LONDON (Reuters) - Energy users could see a small increase in energy bills if a supplier goes bust as a rule change implemented by regulator Ofgem now allows a rescue supplier to add a charge to bills that will help it reimburse customers of the bankrupt supplier.
Ofgem said on Wednesday the change would protect consumers' credit balances when a supplier became insolvent and would give customers more confidence when signing up with a smaller provider.
"It's important that people are fully protected in the unlikely event a supplier goes out of business," Rachel Fletcher, a senior partners at Ofgem, said.
Potential supplier bankruptcies have worried some energy companies as a recent rise in energy wholesale prices has started to put pressure on suppliers' balance sheets.
The changes come just as peak energy demand period approaches, with temperatures falling and energy bills typically rising with higher demand.
When an insolvency happens, Ofgem appoints a so-called "supplier of last resort" to ensure customers' electricity and gas supply will continue. This supplier is selected through a competitive bidding process.
Ofgem said it would now take into account which supplier can best protect customer credit balances when picking a supplier of last resort.