Households are to be spared from immediate energy bill rises to cover the cost of bailing out customers of collapsed suppliers under plans drawn up by the industry watchdog.

Ofgem’s proposals would allow energy providers to raise debt to pay for the burden of taking on customers from rivals that have gone under following a spike in wholesale gas prices. Under existing rules they are forced to put up customers’ bills instead.

A total of 26 retail energy companies have collapsed since August. Bulb, the seventh-largest provider, has entered special administration because no single competitor was large enough to pick up all of its 1.7m customers.

Experts believe that overall rescue costs will hit £4bn, adding £100 to customer bills next year under the present system. 

Ofgem’s proposals would allow companies to initially take out a loan to cover this charge, before gradually recouping the funds from users rather than hitting them with one much larger immediate increase.

The regulator has launched a consultation on how to ease the “severe strain” that energy suppliers have come under in recent months. It warned that more firms will collapse in 2022.

In addition to the cost of supplier collapses, customers are also facing a steep increase in the energy price cap in April.

Gas prices have spiked to as much as nine times normal levels this winter because of a global shortage, but the cap has prevented companies from immediately passing this increase on to households.