Up to seven energy companies are at risk of going bust this week, as the soaring price of wholesale gas continues to cripple the industry.
Twelve energy firms have already gone out of business this year – nine within the last month.
Ofgem, the energy regulator, may confirm as early as Wednesday that a number of gas retailers are about to cease trading.
At least four suppliers were in talks with Ofgem on Tuesday about a possible collapse and handover of accounts,Sky News reported.
Industry sources toldithat between three and seven suppliers are currently vulnerable. It is possible that some could go bust by the end of this week.
Which energy firms could go bust?
Pure Planet, Ampower, Zebra Energy and Neon Reef are believed to be among the companies at risk of collapse, affecting hundreds of thousands of customers.
Pure Planet alone has around 250,000 customers.
The rise in gas prices has already causeda number ofsmaller energy companies to go out of business, including Avro, Green,Igloo,Utility Point, People’s Energy, PfP EnergyandMoneyPlus Energy.
If your supplier does go bust there is no need to panic. Ofgem will move you to a new supplier People should take pictures of their meters and download or print out bills from the old supplier first.
If Ofgem moves you to a supplier or a deal you are not happy with, you can shop around and choose your own supplier.
If yourenergysupplier owes you money, your money is protected and you should get it back.
Why are gas prices so high?
Gas prices have risen by more than 250 per cent since the start of the year.
The simple reason is that demand is increasing again as the economy rebounds from the pandemic, while supply has been drying up.
A cold winter last year left stocks in Europe unusually low, while Russian pipeline gas supplies have also been lower than expected.
Asia also suffered a cold winter, so has been competing to import liquefied natural gas.
The increased demand has pushed prices up not just in the UK, but across Europe and Asia.
How will the gas price surge affect my bills?
The energy price cap – the maximum level energy companies are allowed to charge households on standard tariffs – is toremain in place through the winter, the Government has said.
However, itlooks likely to rise the next time Ofgem reviews it, which could see household energy bills increase by more than £400 a year.
The dual fuel energy bill of the average household on a standard tariff looks set to increase by about 33 per cent, or £421, to £1,698 a year from next April, according to Samuel Tombs, one of the UK’s leading economic forecasters.
This energy bill increase would come on top of the £139 a year cap rise introduced after the latest Ofgem review this month
Gas still generates about 40 per cent of the UK’s electricity, meaning the price of electricity is now more than five times higher than it was a year ago.
A spokesperson for the Department for Business, Energy and Industrial Strategy, said: “The Business Secretary has been in regular contact with Ofgem, and has been engaging with leading and smaller energy suppliers to understand the challenges they currently face, and to explore ways to ensure we best protect consumers.”
“The Energy Price Cap will remain in place to protect millions of customers from sudden increases in global gas prices. When suppliers do cease trading, we have a clear, well-rehearsed process in place to make sure customers are protected and supply is not interrupted.”
Bailout request
Business Secretary Kwasi Kwarteng has submitted proposalsto the Treasury requesting hundreds of millions of pounds to bail out struggling companies.
The Business Secretary’s request hascaused tension with Chancellor Rishi Sunak, although Prime Minister Boris Johnson appears to be in support of the bailout.
Mr Kwarteng is seeking cash subsidies for industries including including steel, glass, ceramics and paper, which have all been hit hard by the gas price increase.
The Treasury is yet to decide whether it will accept Mr Kwarteng’s request.
