Energy bills to rise by £85 because of supplier crisis

ENERGY bills will rise by as much as £85 next year following a raft of supplier collapses, the regulator has warned.

More than 20 energy companies have failed this year as the Governmentimposed price gap prevented them from passing on increased wholesale gas prices. Some 3.8million households have been affected, or 13 per cent of the market.

Ofgem appointed a “supplier of last resort” for the collapsed companies, meaning their customers have been moved to a competitor to maintain their electricity and gas supply.

The costs associated with taking on these customers will add between £80 and £85 to household bills, the regulator estimated.

However, an Ofgem spokesman said the figure should be “treated with caution”.

“It will continue to move up and down into next year as global gas prices remain volatile. We’re continuing to work with government and consumer groups to keep costs on customers’ bills as manageable as possible,” he said. The figure would be even higher if it included the cost of managing the collapse of Bulb Energy, which had 1.7million customers and is the largest failure so far. Last week, Ofgem was forced to put the seventh-biggest supplier into “special administration”, the first time that has happened, while the Government has set aside £1.7billion to keep it going.

The special administrator will try to rescue the company but could consider a sale if it fails to do so.

If Bulb’s collapse had been handled through the “supplier of last resort” process, another £45 would have been added to household bills.

Its cost is being borne by taxpayers but the Government could seek to recover the expenditure through energy bills. Ofgem’s £85 figure is lower than some industry forecasts.

Investec estimated it would cost £120, while Chris O’shea, chief executive of British Gas owner Centrica, said it would be about £100.

Ofgem is due to raise the energy price cap in April, putting more pressure on energy bills.

The cap was already increased by 12 per cent on Oct 1, taking the average dual fuel bill to £1,277.

Ofgem’s documents were disclosed following a court request by Bloomberg News and the Financial Times.