Four more energy firms on verge of collapse

Expected company closures would mean 13 suppliers have failed as a result of surging gas prices

There is growing concern among stronger companies about whether they can afford to take on new customers

The bill for supplier failures could top £1 billion. These failures will push up bills as the industry recoups the cost

FOUR more energy suppliers are in line to collapse amid soaring wholesale gas and electricity prices, leaving thousands more British households facing higher bills.

A string of companies are on the brink of failure as crisis grips the energy market, according to Sky News, with talks under way with Ofgem, the industry regulator. Failures could be announced as soon as this morning.

It would bring to 13 the number of British suppliers that have failed since the start of September, with more likely to follow over the winter. Wholesale gas prices have climbed about six-fold over the past year as a result of a global crunch on gas supplies, with companies unable to pass on costs to customers immediately due to the price cap on energy bills.

Under the regulator’s safety net, customers of failed companies are moved on to surviving companies, where they are typically put onto the new supplier’s default tariff.

In the current climate this is likely to be higher than their previous deal. The price cap, which covers default tariffs, rose by 12 per cent on October 1, adding an average £139 to take the average dual fuel bill to £1,277. Cornwall Insight, the energy consultancy, previously predicted bills could rise by £383 to £1,600 – a roughly 30 per cent increase.

At least four companies are now in talks with Ofgem about their customers being scooped up under the safety net process, Sky News reported yesterday. The companies are thought to be relatively small, but the failures will nonetheless affect hundreds of thousands of households.

That would be on top of the 1.7million customers orphaned by the companies that have collapsed so far since last month. Those that have collapsed so far are Enstroga, Igloo Energy, Symbio Energy, Moneyplus Energy, PFP Energy, Utility Point, People’s Energy, Green Supplier and Avro Energy.

The energy market has expanded rapidly over the past decade, with challengers stealing about a quarter of the market from the so-called Big Six. About 50 suppliers were in the market at the start of the year.

There is growing concern among stronger companies about whether they can afford to take on new customers, given the huge wholesale costs of energy.

They are able to recoup these costs eventually via an industry levy that is ultimately paid for by household bills.

Natural gas prices have been climbing for months as a result of a global supply crunch triggered by factors ranging from lower output in the North Sea, higher demand in Brazil and Asia, and constraints on supply in Russia.

Last week Vladimir Putin said Russia stood ready to help stabilise markets and could export record volumes of gas this year. He asked his Government for proposals on how to stabilise energy markets.

MEPS have called on the European Union to investigate Russia’s role in the crisis, amid concerns that Moscow is withholding supplies to increase pressure on Germany’s regulators to speed up approval for the recently completed Nord Stream 2 – a 760-mile pipeline under the Baltic Sea that will transport gas to Germany – something that the Kremlin denies.

Analysts have questioned whether Russia has the capacity to send more despite Mr Putin’s remarks, given its own production outages, domestic demand and contracts with Turkey and China.

One turning point could come at the start of November, when Russia’s timeframe for filling up its own gas storage sites ends and it may have more supply to send to other markets.

Moody’s, the credit ratings agency, says the bill for supplier failures could top £1 billion. These failures will push up bills as the industry recoups the cost of picking up customers from collapsed businesses.

The UK Government has come under further pressure to protect firms as well as households. The Energy Intensive Users Group, which represents heavy industry, has called on the Government to cap its carbon, gas and power costs.

Ofgem declined to comment.