Four more energy companies 'could go bust this week'

Four more energy companies ‘could go bust this week’ – leaving hundreds of thousands of families facing higher energy bills

  • Ofgem could confirm collapse of four more energy companies as soon as today
  • This would 13 have folded since September with more expected to go this winter
  • Energy companies continue to struggle as wholesale prices touch record highs 

Four more energy suppliers could collapse this week amid soaring wholesale energy prices leaving thousands of homes facing higher bills.

According to Sky News, Ofgem could make the announcement as early as today, after the watchdog warned last week that more companies are at risk of going bust.

Several British suppliers have ceased trading in the past few weeks as prices touched record highs and tariff caps hit smaller firms struggling to keep up with increasing costs.

At least four suppliers were in talks with Ofgem on Tuesday about entering the regulator’s Supplier of Last Resort system, where customers of a failed energy company are passed on to a rival, the Sky News report said.

Four more energy suppliers are reportedly on the brink of collapse amid soaring wholesale energy prices which could leave hundreds of thousands of homes facing higher energy bills 

Ofgem declined to comment on the report.

Wholesale gas prices have soared in recent months as economies reopen from COVID-19 lockdowns and high demand for liquefied natural gas in Asia pushed down supplies to Europe.

Some 12 British energy suppliers have already collapsed this year, affecting more than 2 million customers.

Struggling to cope with record gas prices, nine folded in September, including Enstroga, Igloo Energy and Symbio Energy.

Households attached to collapsed companies will be placed into a rescue regime which will involve Ofgem searching for a new supplier to take them on.

While there is no risk that their gas or electricity supplies will be cut off, they will be switched to tariffs which are likely to be around £400 a year higher.

How are suppliers of last resort determined? 

When an energy supplier collapses, its customers are transferred to another firm, known as a supplier of last resort. 

Under the ‘supplier of last resort’ system, outstanding credit balances owed to existing and former customers will be paid and householders transferred will be protected by the energy price cap.

SOLR are determined through a bidding process, where Ofgem selects the most apporpriate supplier to take in the customers of a collapsed firm. 

Several factors are considered when appointing an SOLR. 

They include timing and supplier size, which means larger suppliers may have to step in if a collapsed firm has a lot of customers. 

Supplier systems are also considered, with those similar to the collapsed one given an advantage.  

Customer time is another factor, for example suppliers with business clients may be more able to take on similar customers. 

Finally, and this is more dependant on the fallen supplier, Ofgem will need up-to-date information on customers. More information means it’ll be easier to determine which supplier takes over.   

Under the ‘supplier of last resort’ system, outstanding credit balances owed to existing and former customers will be paid and householders transferred will be protected by the energy price cap. 

But customers who were on cheaper fixed price deals, signed before the gas price rise, were warned that bills could jump by hundreds of pounds. 

And now, with the annual price cap set to rise to £1,277 from October for a typical household, British Gas and EDF Energy are among the suppliers set to charge customers the top rate.

So far 1.7million homes have been abandoned by energy companies which have already collapsed and thousands more could be plunged into the same position if four more companies fold this week.  

Earlier this month, more than 230,000 households have been moved to E.on Next after the energy supplier picked up the pieces from three failed rivals in the sector.

Regulator Ofgem said it had appointed E.on Next to take on customers who were once on the books of Enstroga, Igloo Energy and Symbio Energy.

Between them the three companies had 233,000 customers.

They will all be switched over by E.on, and can continue to use their gas and electricity as before. 

The three collapsed suppliers are among the nine casualties in the sector since the beginning of September.

It has included some tiny suppliers, such as MoneyPlus Energy and Enstroga, who had just 15,000 customers between them, but also larger players like Avro, which supplied 580,000. 

Energy firms accepting new customers from the failed suppliers have been given assurances that they will be able to recruit any costs and losses they suffer as a result.

This process will allow them to claim back the money through levies that will be applied to all customer bills and could run to more than £1billion.

The Business Secretary, Kwasi Kwarteng, has repeatedly stated the government has no intention of propping up or offering financial support to failed energy firms.

Source: Read Full Article