It is now expected around half of the energy suppliers could go under, with more failing in the past few weeks, and as the crisis shows no signs of abating.
Consultant Cornwall Insights said the number of domestic suppliers in the UK has reduced from 47 at the start of the year to only 25 – at the peak in 2018, there were 70 providers.
Energy suppliers that have gone under recently include:
· Zebra Power
· Omni Energy
· MA Energy
· Bluegreen Energy
· Goto Energy
· CNG Energy Limited
· Pure Planet
· Colorado Energy
What has caused the energy crisis?
The crisis has been caused by soaring wholesale prices and many providers being unprepared for these and so finding their business models was unsustainable. There is also a global gas shortage, with Russia in particular tightly controlling supplies.
The wholesale cost of energy has risen by around 250% since the start of the year but because of the energy price cap, bills have only risen by around 12%. Because suppliers have not been able to pass the cost onto consumers, many have had to stop trading.
To date, around two million customers have been affected by business failures and were transferred to another supplier by regulator Ofgem, under the process known as a supplier of last resort. After being moved, many consumers are now paying higher bills.
The government has offered no support to the energy sector and said that it expects further suppliers to fail. There are also now concerns that the number of energy suppliers in the UK could fall to around six and with these companies being in a challenging situation, having been forced to take on many thousands of additional customers that were unplanned for and are loss-making.
Who will be next to fail?
Simon Renshaw, director with Company Debt, says: “This situation is set to continue for many months. The next company that appears likely to fail – unless an eleventh-hour rescue can be found – is Bulb. The company has around 1.7 million customers and focuses on green energy. If it were to fail, it would be the largest supplier to date, and around a thousand jobs would also be at risk.
“This could be a turning point as far as government intervention is concerned since this is a vast number of customers that would need to be passed on to other suppliers. It’s unlikely a single supplier would be able to cope, under the current supplier of last resort scheme. Even the largest energy companies will be feeling the pressure, not least in the increased costs of hedging.
“Of course, it’s bad news for domestic consumers, but also, these failures are having a knock-on effect on businesses. Commercial premises need to heat their premises and use energy for industrial processes and SMEs, in particular, may find that they cannot afford their energy bills. We’re currently waiting to see what changes are introduced to the energy cap, but this is likely to only mean higher bills and may come too late for a number of suppliers. We need a better framework now put in place to prevent this situation from ever occurring again.”