Sep 22, 2021
U.K. Energy Supplier Collapse Now Affects 1.5 Million Households
, Bloomberg News
(Bloomberg) -- More than 1.5 million households in Britain are being forced to switch energy suppliers after two more retailers collapsed on Wednesday, bringing the tally of companies going out of business to seven since early August.
The last two victims were Green Supplier Ltd. and Avro Energy Inc, which both collapsed on Wednesday. Avro had 580,000 customers and Green had 255,000, accounting for 2.9% of households in Britain. Another five suppliers, with more than 650,000 customers in total, have also collapsed since the start of August as natural gas and power prices surged to record-highs. The announcements follow a prediction made by U.K. Business Secretary Kwasi Kwarteng on Tuesday that more companies would be in trouble.
Kwarteng has held emergency meetings with suppliers during the past few days. Companies have been asking for the price cap on default tariffs to be lifted to allow them to shift some of the pain onto consumers but the government has stated that this won’t happen. Instead, state-backed loans are being considered to help ease costs for larger firms to take on the customers of failed companies.
“The current market conditions are unprecedented, with record wholesale energy prices pushing the cost of energy above the price cap,” Green said in a statement. “This means that Green, like all other energy suppliers, are selling energy to customers at a loss.”
Power markets regulator Ofgem will now find a supplier for the customers of Green and Avro. This is usually a straightforward process but larger companies have said they aren’t willing to take on clients at a loss.
Speaking to lawmakers earlier, Kwarteng said the country should be prepared for higher longer-term prices. RBC Europe Ltd. estimates that bills could jump by as much as 400 pounds ($546) a year because of surging costs.
“Soaring wholesale prices are making conditions difficult for all suppliers, but challenger brands in particular are struggling to make ends meet,” Justina Miltienyte, an energy policy expert at Uswitch.com, said in a statement.
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