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»»Families face hike in bills to pay for collapse of firms »»Two more go bust, No10 ‘knew of crisis a year ago’
FAMILIES with energy firms that face collapse are bracing themselves for a huge hike in bills as the gas crisis escalates.
As more smaller companies go bust customers will be mopped up by bigger suppliers but are likely to be put on much higher tariffs.
It could leave households with shock rises of up to £300 a year.
The soaring prices come on top of a rise in the energy price cap, a National Insurance hike, a looming cost-of-living crisis and a £20 axe in Universal Credit by the Tories that will batter the poorest.
And Energy UK claimed No10 was warned about the fragile energy supply at least a year ago.
Business Secretary Kwasi Kwarteng even said families should brace themselves for years of soaring energy bills.
All energy users will pick up the tab for the wave of collapses. The cost of compensating firms that take on their accounts comes from an industry scheme, which is funded by a levy added to all energy bills.
Avro Energy and Green Supplier yesterday became the latest victims of the bloodbath caused by rocketing wholesale energy prices as they both went out of business.
They had 835,000 customers between them.
Energy regulator Ofgem stressed that a safety net will ensure an uninterrupted supply to customers, with any credit on their accounts protected. Another bigger supplier is expected to be appointed in the coming days to take over the two firms’ accounts.
It is believed customers of Edinburgh-based People’s Energy, which went bust last week and its accounts taken on by British Gas, face a price hike of about £300 a year, or 28 per cent – nearly nine times the rate of inflation. It could start as soon as next month.
One in four homes, six million, are said to be with firms whose wholesale supplies are not “hedged” against market
fluctuations as it is too costly.
Citizens Advice head of energy policy Gillian Cooper said: “These latest failures will add to people’s worries at what’s already an extremely unsettling time. Supplier collapses and rocketing energy
prices are creating of uncertainty.”
PM Boris Johnson has claimed the energy problem is “temporary”. But Kwarteng warned spikes in wholesale gas costs could persist. He said: “You would expect normally the price would revert to mean.
“But we have to prepare for longer-term high prices.”
The default tariff cap will rise by £139 a year and the prepay meter cap by £153, landing customers with bigger bills.
Twelve suppliers with nearly two million customers have gone bust in the past year. Half of those failed this month alone, hitting 1.5 million households. Another supplier, Igloo, is also said to be at risk.
Wholesale gas prices have leapt 250 per cent since the start of the year and 70 per cent since August.
Emma Pinchbeck, of Energy UK, claimed ministers knew of the looming energy crisis a year ago.
“I know that for a year or more before I was hired my team had made the case to the Government that the sector is fragile.”