Sky-high gas price hitting supply chain

BRITAIN’S home energy market could contract to just eight suppliers according to consultant Ey-parthenon, down from 45 at the start of the year, due to skyrocketing wholesale costs bankrupting companies.

The surge in natural gas prices has seen 14 suppliers collapse over the last couple of months, including Pure Planet, a green energy supplier backed by oil giant BP.

Last week Scottish Power’s chief executive Keith Anderson warned that as many as 20 suppliers could go bust over the next few weeks.

Challenger energy groups are failing in droves because they are less able to hedge against rising costs and their businesses are focused on lowmargin electricity and gas supply.

The Government’s price cap has contributed to the squeeze, forcing many to sell power to homes at a loss.

In a report, EY said: “We expect the number of energy suppliers to consolidate to 8-10, given October’s limited price cap increase and the prospect of continued high gas prices.”

Just over three years ago, there were 70 domestic suppliers. EY says home energy suppliers that survive the crisis will be in a better position to charge higher prices going forward and invest in the decarbonisation of the home energy sector.

“Ultimately the sector’s future will lie in higher-value home energy services, supporting the UK’S journey to Net Zero,” it says.

Anderson believes that in order to protect the market and ensure it does not return to the days of being dominated by the Big Six, the Government needs to scrap its price cap on tariffs.