A sharp rise in wholesale gas prices has hit energy firms hard in recent weeks, with a number of small companies collapsing amid warnings that more could soon follow them.
Prices have risen dramatically this year due to a number of factors, such as rising demand as the world emerges from the Covid-19 pandemic and an unusually cold winter that left stocks low.
Firms have also complained that the UK’s price cap on energy bills has meant that they have not been able to pass on the price rise to customers, forcing the companies to pick up the cost.
On Wednesday, Ofgem chief executive Jonathan Brearley warned that he expected “a large number of customers” to be affected by the crisis, which has already led to multiple energy suppliers going out of business this month.
“It's not unusual for suppliers to go out of the market. I think what is different this time is that dramatic change in the costs that those suppliers are facing,” Mr Brearley said.
“We do expect more [suppliers] not to be able to face the circumstances we're in, but it's genuinely hard to say more than that, partly because that means predicting what may happen to the gas price.”
What should I do if my energy supplier goes out of business?
The good news is that you will still have gas and electricity even if your energy supplier goes bust as Ofgem, the UK’s gas and electricity regulator, will move you to a new supplier.
This will usually take a few weeks but your energy supply will not be disrupted during that time.
You then just need to wait for your new supplier to contact you, as they will explain what is happening with your account.
Ofgem says it will decide who your new supplier is, with details announced on its website and social media following a bidding process from suppliers to get the “best possible deal” for customers.
While this process is going on, customers are advised to check their current balance, download any bills (if possible), and take a photo of their meter reading.
Which companies have gone bust so far?
About 1.5 million customers have been affected by the energy crisis this month after Avro Energy and Green Supplier Limited became the latest suppliers to go out of business.
The firms have joined People's Energy, Utility Point, PfP Energy and MoneyPlus Energy in leaving the market in recent weeks.
Meanwhile, Bulb, the UK’s sixth largest energy company with 1.7 million customers, is seeking financial help.
Collectively, the companies that have recently collapsed account for more than 5 per cent of the market, or around 1.5 million customers.
Commenting on the two latest companies to go bust, Ofgem director of retail Neil Lawrence said: “I want to reassure customers of Avro Energy and Green Supplier Limited that they do not need to worry.
“Under our safety net we'll make sure your energy supplies continue. If you have credit on your Avro Energy or Green Supplier Limited account this is protected and you will not lose the money that is owed to you.”
Additional reporting by PA
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