Six more energy firms to go bust this month with 400,000 households at risk, warns Energyhelpline
HUNDREDS of thousands of households are on the brink of losing their energy supplier before Christmas as six more firms could collapse this month, warns Energyhelpline.
The stark prediction would see misery heaped on up to 400,000 customers this December.
It comes as Zog Energy became the latest victim of the energy crisis.
The provider collapsed yesterday - the 26th supplier to cease trading this year.
Energyhelpline warned that the string of collapses mean household bills are likely to rise further.
It predicts that the energy price cap could be hiked by an eye-watering £475 in February, taking the average bill up to £1,750.
Already this year some 3.8 million customers have seen their energy provider go under, causing disruption and a spike in bills.
Many households are already struggling to cope, with many facing the choice between heating and eating this winter.
Mark Bennett, head of energy at Energyhelpline.com, said: “Unfortunately, with wholesale prices showing no signs of reducing in the near future, we can expect more energy suppliers to cease trading in the coming weeks.”
Most read in Money
What’s happening to UK energy firms?
Smaller firms have struggled to cope with soaring wholesale gas prices.
That’s because businesses can’t pass on those rising costs to customers who are on a fixed tariffs, meaning they have to absorb the increase themselves.
This left many firms running at a loss.
Green Network Energy and Simplicity Energy were the first suppliers to collapse in 2021 and ceased trading on January 27.
The next firm to go under was HUB Energy in August.
Since then, a further 24 suppliers have succumbed to market pressures including Bulb Energy, the sixth biggest provider in the UK with more than 1 million customers.
According to Ofgem, there were 52 energy suppliers in the market at the start of the year and this has now almost halved.
A number of factors are driving wholesale energy prices up, including higher than expected demand as economies re-opened after lockdowns and low supply.
A fire affecting imported French electricity and lack of wind turbines have also been blamed, along with low wind speeds.
More recently, a delay to a controversial gas pipe between Russia and Germany has added to the issues.
The UK imports more than two-thirds of its gas, and imported energy is more exposed to global price swings, which can make prices more volatile.
According to Ofgem, the average forward wholesale gas price hit 114.14p at the end of October, more than double its February level of 48.29p.
What if my supplier goes bust?
The most important thing for households to know is that they will not be left without an energy supplier.
Households should not change supplier now, even if their provider is in trouble or goes under.
The energy regulator, Ofgem, appoints a new provider to any customers whose supplier goes bust.
For example, British Gas has taken on the 30,000 customers of Neon Reef and 14,800 Zebra Power customers.
Shell Energy has taken on the 235,000 Pure Planet customers as well as those of Daligas, Colorado Energy and GOTO Energy.
But there are fears that fewer suppliers in the market could mean more bill hikes.
There are currently 27 providers left in the market, according to Ofgem.
Less competition means these firms don’t have to offer great deals to entice new customers.
Previously, the Big Six dominated the energy market and were accused of price gouging as customers had few alternatives.
Neil Lawrence, director of retail at Ofgem, said: ”We know this is a worrying time for many people and news of a supplier going out of business can be unsettling.
READ MORE SUN STORIES
“I want to reassure affected customers that they do not need to worry; under our safety net we’ll make sure your energy supplies continue.
“Ofgem will choose a new supplier for you and while we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime.”
We pay for your stories!
Do you have a story for The Sun Money team?
Email us at [email protected]