Two more UK energy retailers fail: regulator
Two more British energy retailers ceased trading mid-September, according to energy regulator Ofgem. Utility Point and People’s Energy between them had about 570,000 customers, nearly all domestic.
The news follows the announcement that UK retailer Centrica had become the energy supplier to the customers of two much smaller companies who ceased trading earlier in the month.
Ofgem said it does not comment on the reasons for failure but the four recent examples have not come out of the blue. Gas and power wholesale prices have never been as high for so long as this year, and the regulatory price cap for households will not be raised until next month. Even that rise might be inadequate for some as wholesale prices have risen further since then.
Under Ofgem’s safety net, the energy supply of Utility Point and People’s Energy customers will continue and outstanding credit balances of domestic customers will be protected. Ofgem will choose a supplier of last resort (SolR) to fulfill the contracts.
It told NGW: "In previous SoLR cases, Ofgem has had a range of competitive bids from potential SoLRs and we would expect there to be interest from competitors in gaining the customers of Utility Point and People's Energy. In the event that no suppliers come forward, Ofgem can then direct a supplier to become the SoLR." This is likely to take a few days.
Ofgem said that the conditions for becoming an energy supplier had become tighter in the last few years following a review in 2019. In its response to the consultation that year, dominant residential supplier Centrica said: "Nine energy suppliers have failed over the last 12 months. These failures are estimated to have resulted in a conservative estimate of over £100mn ($140mn in today's money) being redistributed across the remaining energy suppliers, who will have to pass this cost through to consumers. The current regime therefore does not strike a balance between enabling new entry and limiting the scope for harm to competition and consumers."