Nearly 1.5 million consumers have been affected by the energy supply crisis in the past two weeks and thousands more are likely to be affected.
Avro Energy, the company that supplied 580,000 homes, collapsed on Wednesday, making it the biggest company to ever fail. Green, which has 255,000 customers, has also closed business.
Seven suppliers have fallen this month due to the impact of a sharp increase in bulk gas prices on the industry. Millions of households may face higher gas prices in the coming months and experts predict the problems will continue into the new year.
What if my energy provider shuts down?
Seven energy suppliers – Hub, Money Plus, Utility Point, People’s Energy, PFP, Green and Avro – have all been taken out of business.
If you were with one of these companies, there would be no interruption in your gas and electricity supply.
Your account will be moved to a new supplier, a process known as a “supplier of last resort,” although this may take a few weeks.
Although it is likely that you will have to pay higher bills for your energy. The default tariff cap set by regulator Offgame increases from next month to £1,277 a year. As a result, many customers will be transferred to companies that will charge up to this rate for the supply of a new package.
This would mean a significant price increase for those who struck cheap deals with smaller suppliers. For example, customers who signed a one-year fixed-price deal with Avro in March would have signed up to pay £920 per year.
Millions of households could see their bills increase by over £350 when raised to a capped rate of £1,277.
Scott Byrom, chief executive of The Energy Shop, explained the situation, saying: “Consumers did what Offgame advised and shopped to find a better energy deal.
“If we look at customers who switched to Green, one of the previous suppliers, they were switching to a 12-month fixed tariff in May, with an average bill of £972 a year.
“Unless the supplier of last resort is the one to honor them, which I highly doubt they will be moved to a contract at the standard variable rate – an increase of £305.
“Those customers are being punished at the worst possible time.”
Dr Craig Lowrey, senior advisor at Cornwall Insight, said: “Clients are potentially seeing an increase of £1 to £300 per year when they are moving from a supplier that was competitive on price that supplied the default tariff cap. does.”
Industry experts are also predicting that offgame’s capped rate is highly likely to increase in April as the regulator takes into account wholesale costs for businesses.
Cornwall Insight, a market research company, has predicted the price range will be £1,455 when updated next year, and Energy Shop has predicted an increase of £1,555.
If you’re not with one of the seven firms that have already closed, there’s a chance the crisis could still affect your energy supplier.
Some analysis by experts at Baringa Partners many times It was found that by the end of winter the market may shrink to just ten energy suppliers.
Bulb, the UK’s sixth-largest energy firm with 1.7 million customers, is looking to shore up its finances and another firm, Igloo, is working with restructuring advisors.
If I have a high credit balance, will it be carried over to my new supplier?
It is likely that any credit balances you create will be transferred to your new supplier. At this time of year, customers will typically have built up hundreds of pounds in credit over the summer period, when they use less energy.
Mr Byrom of The Energy Shop said customers can rest assured that their credit will still be with their new supplier. He added: “Any credit on the account will be honoured. If you are with a supplier and you have a credit of £200, it will still stand on your account with any supplier.”
Customers have been advised to take a note, or photograph, of their current meter readings and energy bills so that they can have accurate information on record in case of any issues.
How long are the issues set to last?
Ofgem CEO Jonathan Brearelli has said he expects more companies to close and more customers to be affected. Speaking at the Commons Business Select Committee hearing on Wednesday, he said: “I think it’s a different kind of change.
“The region has faced tremors. But when you look at that change it’s really something that we don’t think we’ve seen before at this pace. Let’s just start with the customers.
“When you look at costs like this change, eventually that will feed through to the bills. It’s true that many suppliers are now under enormous pressure because of that change in their cost base.”
Dr Craig Lowrey, a senior advisor at Cornwall Insight, a market research company, said these were the most volatile set of market conditions that many in the industry had ever experienced.
He said: “I’ve been in and around the energy sector for 27 years and the closest I’ve seen was the decline of Enron leaving the market in 2001, and it cascades well into 2002 and 2003.
“It’s a lot of unknown territory for the energy market.”
What assurance has the government given to the consumers?
Trade Minister Paul Scully has said the government cannot guarantee that consumers can keep the terms of their previous energy tariffs if their supplier collapses.
Mr Scully told Times Radio on Thursday: “No, it would not be possible in terms of guarantees.
“We will have protection though. They don’t need to do anything because their transfer will be done directly through an offgame plan, making sure they have a company to look after them, that supplies their energy.
Trade Secretary Kwasi Quarteng told lawmakers on Wednesday that the government was preparing for “long-term high prices”.
He said the government would not “reward failure” and would bail out smaller suppliers. His department is instead organizing multi-billion-pound state-backed loans for large suppliers to take on customers from smaller companies.
However, Mr. Quarteng said it was worrying to talk about the gas shortage. “With people unable to heat their homes, there is no question of the lights going out. There will be no three-day work week, or a…
Credit: www.independent.co.uk /