Many energy firms are facing an uncertain future as a sudden rise in wholesale gas prices threatens to reshape the UK sector.
Industry experts predict as many as 60 energy companies could go to the wall in 2021, reducing the number of suppliers to as few as 10.
This is a significant drop from the start of the year, which saw 70 firms supplying energy to UK households, as the hike in gas prices grips tight.
Wholesale gas prices have risen 250% since January 2021 and 70% in August alone, according to data gathered by industry group Oil & Gas UK.
These are the energy companies to have gone bust, those in trouble and what the government has said amid rising wholesale gas prices.
Why are gas prices rising?
An imbalance between supply and demand has seen the price of gas skyrocket.
There is a high global demand for gas, with the UK's needs increasing as the colder weather set in through the winter months, while a shortage of supply.
Planned maintenance, reducing the nuclear power outage of the UK by a fifth, as well as lower solar and wind renewable energy generated has also contributed.
At the moment, companies are shouldering that financial burden due to the government's energy price cap which limits the cost firms can pass on to its customers.
Yet the cap is set to rise by £139 a year, from £1,138 to £1,277 a year, starting from 1 October 2021 and will be reviewed again by Ofgem in six months’ time.
Who are ‘the big six’ energy companies?
A collection of well established energy companies are known as 'the big six'.
They are the biggest energy suppliers in the UK and have been dominant in the sector for some time - but they are not adverse to change with many mergers having taken place.
Traditionally, the big six were British Gas, EDF Energy, E.ON, npower, Scottish Power and SSE.
Though SSE is owned by OVO, npower is owned by E.ON and Scottish Power is owned by Iberdrola and not all the companies supplying gas to the UK are based in the UK.
Which energy companies have gone bust?
Pressure continues to mount on many energy firms, brought on by the rise in wholesale gas prices coupled with the energy price cap.
It has proved too much for some companies in recent weeks, with 14 UK suppliers biting the dust unable to find a way forward amid rising costs.
The companies are:
- GOTO Energy Limited (18 October)
- Daligas Limited (14 October)
- Pure Planet (13 October)
- Colorado Energy (13 October)
- Igloo Energy (29 September)
- Symbio Energy (29 September)
- Enstroga (29 September)
- Avro Energy (22 September)
- Green Supplier Limited (22 September)
- Utility Point (14 September)
- People’s Energy (14 September)
- PFP Energy (7 September)
- MoneyPlus Energy (7 September)
- HUB Energy (9 August)
Ofgem has appointed Shell Energy Retail Limited to take on supplying Pure Planet Limited, Daligas Limited and Colorado Energy Limited’s combined total of approximately 252,000 domestic customers and 600 non-domestic customers.
Neil Lawrence, Director of Retail at Ofgem, said: “Ofgem’s number one priority is to protect customers. We know this is a worrying time for many people and news of a supplier going out of business can be unsettling.
“I want to reassure affected customers that they do not need to worry: under our safety net we’ll make sure your energy supplies continue. If you have credit on your account the funds you have paid in are protected and you will not lose the money that is owed to you.
“Ofgem will choose a new supplier for you and while we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your tariff.
“Any customer concerned about paying their energy bill should contact their supplier to access the range of support that is available.”
New suppliers have been found for most of the firms to have gone bust, with industry regulations ensuring energy supply will continue for affected customers.
Which energy suppliers are in trouble?
A handful of the UK's energy suppliers are at risk of going bust in the next week, according to reports.
Following the collapse of Pure Planet, Colorado Energy, Igloo Energy, Symbio Energy, Enstroga, Avro Energy, Green Supplier Limited, Utility Point, People's Energy, PFP Energy and MoneyPlus Energy in September 2021, more could follow before the end of the month.
Bulb Energy, the UK's sixth largest energy company, is one of those suppliers looking for extra funds to bring order to the balance sheet, as it searches for a bailout.
Government chiefs have been in talks with representatives from the energy industry to understand the widespread impact the rise in gas prices is having on households and businesses.
While a handful of smaller supplies, believed to be Ampower, Zebra Energy, Neon Reef, are in crisis talks with Ofgem, according to Sky News.
The suppliers are currently in talks with Ofgem about entering its Supplier of Last Resort (SOLR) system, which helped more than 1.7 million customers switch providers after firms had gone bust.
Is the government helping Bulb Energy?
Despite efforts to secure extra funds, Bulb Energy has reportedly not found any takers so far.
As Britain’s sixth largest supplier, with just over 5% of the market share, the government is considering the nationalism of the energy company, according to the i website.
The initial hope from ministers that some of the larger energy suppliers would take on its customers appears to be dashed with none coming forward with the capacity to absorb the troubled firm’s accounts.
It means that the industry regulator Ofgem and the government could step in, using special administration powers, to keep Bulb afloat while new sources of income are explored.
Business secretary Kwasi Kwarteng has said taxpayer money will not be used to bail out struggling energy suppliers, but will offer some support to viable companies.
Mr Kwarteng said: “Loans is a solution we are looking at, but what am I keen to stress is that these won’t be grants these are not simply handouts. Nor should we bail out all the companies or energy suppliers because a number of them have been badly run.
“It is not a good practice to spend tax-payer money on propping up companies that have been badly run.”
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