Monday, November 29, 2021

Orbit and Entice are the newest energy suppliers to go bankrupt

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Entice Energy and Orbit Energy are the latest gas and electricity companies to go bankrupt, bringing the total breakdowns to 25 since August.

Macclesfield-based Entice and London-based Orbit both announced that they would cease trading on Thursday due to the latest developments in an ongoing crisis in the UK energy market.

In a letter to customers, Orbit blamed Ofgem and the government for the collapse. The company said it has always been a “well-run supplier” who has been “prudent” in buying energy but has become unable to survive because of the way the energy price cap was handled.

“Unfortunately, the UK government and our regulator, Ofgem, expect us to sell energy at a much lower price than it costs to buy – which makes it unsustainable to operate,” the company said.

“It is with a heavy heart that I write to you, our loyal customers, to let you know that despite our best efforts, it is no longer possible to supply British households with energy.”

The customers are transferred to other providers and see no interruption in their gas or electricity connection. Credit is also protected.

Suppliers have been hit by a surge in gas prices, with little recovery expected through spring 2022.

The energy price cap, which is set at £ 1,277 a year for the average household, means providers are losing money on many of their customers. The upper limit is not due to be revised until the beginning of next year, with the new rate being introduced on April 1st.

Experts believe that only 10 companies can survive that long if the government doesn’t intervene further. In early 2021 there were 71 utilities in the UK.

Last week Ofgem asked five utilities to pay their contributions to a scheme to promote renewable energy production. Orbit missed paying more than £ 451,000.

Economics minister Kwasi Kwarteng pointed his finger at “poorly managed” companies and said in September that the government would not throw “taxpayers’ money” on suppliers who went bankrupt due to poor management.

It was revealed on Wednesday that the government has allocated £ 1.7 billion to ensure that Bulb – the UK’s seventh largest operator – can continue to power its customers even after the administrators are appointed this week.

The funding commitment means that each of Bulb’s 1.7 million customers will be supported with £ 1,000 public funding while Special Managers Teneo are looking for a long-term solution that could mean selling the business or transferring customers to other suppliers .

Tax and advisory firm Blick Rothenberg said the government had to do more to support smaller suppliers.

“The government must consider setting up a special corporate loan program for small providers or revising the price cap for a limited period of time or more energy companies will fail,” said Simon Rothenberg, director of the company.

“A special loan program would be preferable, leaving things to the last minute and then running a business through special administration.

“If the government does not intervene, the energy market will only be used by the big six providers and consumers will no longer have the flexibility they have enjoyed so far.”

Ofgem and the government were asked to comment.

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