The UK’s energy crisis deepens and we’ll all pay the price with customers already hit with huge rises as firms supplying six million face going bust
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Brits are being hit with energy bill rises as they are shifted on to high tariffs of big firms mopping up customers from bust suppliers.
And all households will pay for the collapse, as the compensation for large takeovers is added to bills.
Two more suppliers closed today, amid fears firms providing six million homes face ruin.
Families with energy firms that face collapse are bracing themselves for a huge hike in bills as the gas crisis escalates.
As more smaller companies go bust customers will be mopped up by bigger suppliers but are likely to be put on much higher tariffs.
It could leave households with shock rises of up to £300 a year.
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The soaring prices come on top of a rise in the energy price cap, a National Insurance hike, a looming cost-of-living crisis and a £20 axe in Universal Credit by the Tories that will batter the poorest.
And Energy UK claimed No10 was warned about the fragile energy supply at least a year ago.
Business Secretary Kwasi Kwarteng even said families should brace themselves for years of soaring energy bills.
All energy users will pick up the tab for the wave of collapses. The cost of compensating firms that take on their accounts comes from an industry scheme, which is funded by a levy added to all energy bills.
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Avro Energy and Green Supplier yesterday became the latest victims of the bloodbath caused by rocketing wholesale energy prices as they both went out of business.
They had 835,000 customers between them.
Energy regulator Ofgem stressed that a safety net will ensure an uninterrupted supply to customers, with any credit on their accounts protected. Another bigger supplier is expected to be appointed in the coming days to take over the two firms’ accounts.
The Mirror understands customers of People’s Energy, which went bust last week and its accounts taken on by British Gas, face a price hike of around £300 a year, or 28% – nearly nine times the rate of inflation. It could start as soon as next month.
Citizens Advice head of energy policy Gillian Cooper said: “These latest failures will add to people’s worries at what’s already an extremely unsettling time. Supplier collapses and rocketing energy prices are creating huge amounts of uncertainty for millions.”
Boris Johnson has claimed the energy problem is “temporary”.
But Mr Kwarteng warned spikes in wholesale gas costs could persist. He said: “You would expect normally the price would revert to mean. But we have to prepare for longer-term high prices.”
The default tariff cap will rise by £139 a year and the prepay meter cap by £153, landing customers with bigger bills.
Twelve suppliers with nearly two million customers have gone bust in the past year. Half of those failed this month alone, hitting 1.5 million households.
Another supplier, Igloo, is also said to be at risk.
One in four UK homes are said to be with firms whose wholesale supplies are not “hedged” against market fluctuations as they cannot afford to fund the arrangement.
Wholesale gas prices have leapt 250% since the start of the year and 70% since August.
Emma Pinchbeck, of Energy UK, claimed ministers knew of the looming energy crisis a year ago.
“I know that for a year or more before I was hired my team had made the case to the Government that the sector is fragile.”
Q&A – What should we do now?
Q What happens if my supplier goes bust?
A Don’t panic. The industry has a system called Supplier of Last Resort (SoLR) which kicks in.
It means another supplier will step in to “rescue” those customers, meaning your gas or electricity won’t be cut off.
The system has worked well until now, but is being put under unprecedented strain.
QWhat should I do?
A Take a meter reading. Ideally take a picture for proof.
Have your latest bill, or take a screenshot of your online account balance and other information.
QWhat happens to any credit
A It will be protected. The cost of covering such balances comes from a levy on all energy bills. You are likely to still owe any debt.
QWill what I pay change?
A Customers don’t have to stay with the new supplier which is appointed and are advised to shop around.
That’s harder right now because there are so few cheap fixed rate deals, but it’s still worth looking.
Which firms are at risk?
Suppliers to go bust in past year
- Effortless 2,500 customers
- Tonik Energy 130,000
- Yorkshire Energy 74,000
- Simplicity Energy 50,000
- Green Network Energy 360,000
- Hub Energy 15,000
- PfP Energy 85,000
- MoneyPlus Energy 9,000
- Utility Point 220,000
- People’s Energy 351,000
- Avro Energy 580,000
- Green Supplier Limited 255k
Big Four sSuppliers
- British Gas
- The loss of small suppliers is likely to benefit the big four energy firms and their main challengers.
- It is estimated 10 firms will survive the crisis, stifling competition.
- All energy customers will pick up the tab for the collapses as the cost of compensating those companies that take over their accounts comes from an industry scheme. It is funded by a levy added to bills.
Big Four challengers
- Ovo Energy
- Octopus Energy
- Shell Energy
‘Working on restructuring’
- Igloo is said to be restructuring and is among five firms that missed a deadline to pay £765,000 in total for a renewable energy scheme.
- Colorado Energy
- Neon Reef Limited
- Whoop Energy Limited
- Symbio Energy
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