Consumers warned that many of them could face up to £ 4 billion spike in bills – as the number of failed businesses hits 14
Crashed utilities have warned that many customers will face up to $ 4 billion in total bills.
The upheaval could result in the average consumer bills increasing by well over £ 100, on top of the price hikes already waved off by the regulator.
Pure Planet and Colorado Energy were the last to go bankrupt today as smaller companies struggle to pay higher wholesale gas prices.
Pure Planet, which has 235,000 customers, was backed by BP – and failed after refusing further funding. Colorado serves 15,000.
Green and Utility Point, both of which stopped trading in September, said I that Ofgem, the energy regulator, hasn’t done enough to support failing suppliers. So far this year 14 companies have gone to the wall.
Reports that up to seven suppliers could go bankrupt this week amid rising wholesale gas prices aren’t surprising, they said.
Other troubled companies named in reports include Zebra Energy, Ampower, and Neon Reef. Together they supply hundreds of thousands of customers with energy.
Steven Redmayne, Green’s chief operating officer, said he was hoping action would be taken before other companies were in a similar situation to him.
“All over Covid, every energy supplier had to send Ofgem data about its financial stability every month.
“Since the rhetoric was about bad business, why didn’t Ofgem or the government intervene if they did? [during] the last two years? If we are all badly run companies, do you have this data, what did you do with it? “
He warned that the costs of failing companies would be spread across all remaining utilities, who would then pass them on to customers at variable tariffs and at fixed tariffs when they were renewed.
“All of these power supply failures come at a price. It’s the cost of moving these customers, the system cost, the cost of buying energy at this very expensive time, extra man hours to do it, ”he said.
Mr Redmayne, whose company had 90,000 customers, said conservative estimates put the total cost of supplier downtime at $ 1 billion or £ 4 billion very quickly ”.
Andy Harris, chief information officer at Utility Point, said it was difficult to quantify the financial burden on customers, but it could add up to hundreds of millions of pounds.
“People in the industry told the government and Ofgem months before it happened that there was going to be a problem, but for some reason they didn’t want to listen.
“The problem that all providers are allowed to fail and the talk about the upper price limit to protect consumers is unfortunately a bit misleading.
“If these suppliers fail, part of the costs will then be borne by the remaining suppliers and … [energy] Price cap calculations.
“When they calculate the next cap, all of those fees will go into that calculation and everyone will pay a higher bill due to supplier failures.
“The increase in the upper price limit will not only be due to increased wholesale costs.”
He said most utility companies agree that the number of companies could shrink from 40 to 50 now to around 10.
Dr. Lawrence Haar, a senior finance lecturer at Brighton Business School, tried to allay customers’ fear of price hikes by saying of the failing suppliers, “Since these companies are unhelpful and not adding value, I have no reason to Assumption that consumer prices for electricity will be affected or even increased by their departure.
“Indeed, as resellers trying to make a margin by doing very little, their small-scale exit could benefit.”
Ofgem said, “Ofgem’s number one priority is protecting customers. We know this is a worrying time for many people.
“The upper energy price limit covers around 15 million households and ensures that consumers will not pay more than is absolutely necessary this winter.
“Any customer who is concerned about paying their energy bill should contact their supplier for access to the available support services.”