Two energy suppliers have collapsed, leaving more than half a million households in limbo as wholesale energy costs surge to record highs.
People’s Energy, which has 350,000 household customers and 1,000 business customers, and Utility Point, with 220,000 household customers, both stopped trading yesterday.
Ofgem, the energy regulator, will now appoint new suppliers to take on customers of both companies.
Their failures mean that five suppliers have collapsed since the start of last month as wholesale gas and electricity costs have surged to record highs. In all, twenty-nine suppliers have collapsed over the past five years, many after offering unsustainably low prices.
Industry insiders believe that more failures are likely to follow soon. Last night Ofgem threatened to shut down Avro Energy, which has more than 560,000 household customers, unless the company provided unspecified “financial and other information relating to the company’s activities”.
The collapses came as day-ahead power prices for peak delivery today rose to new highs of more than £2,500 per megawatt-hour on the N2EX exchange, according to EnAppSys, the consultancy. Month-ahead gas prices surged to new record highs of 165p per therm, more than five times higher than this time a year ago.
Global gas prices have leapt after a long, cold winter left storage sites depleted and demand bounced back from the pandemic at the same time as supply interruptions. High gas prices are in turn pushing up electricity costs across Europe, compounded in Britain by bouts of low wind power output and outages at nuclear plants, increasing the country’s reliance on expensive gas.
Justina Miltienyte, of Uswitch, the price comparison website, said that the latest supplier failures reflected “the difficult conditions challenger brands are facing … many of which operate on thin profit margins, and they have been hit hard by the knock-on effects of rising wholesale prices”.
Last night Avro Energy’s website carried a message saying that the company was “seeing a volume [sic] of calls regarding renewal prices. Unfortunately wholesale energy costs have risen sharply in the last year and are now at the highest since 2008.”