More than 230,000 customers from three collapsed energy suppliers will move to E.ON under plans agreed by the industry watchdog, as soaring wholesale gas and electricity prices shrink the pool of independent providers.
Ofgem said it had appointed E.ON Next – the new consumer brand of the German energy group – to take on customers of Igloo Energy, Symbio Energy and Enstroga.
The move comes as rising gas prices continue to cause turmoil in the sector, prompting warnings that growing numbers of people will struggle to pay their bills this winter amid a sharp rise in household energy costs.
Against a backdrop of consolidation across the industry as major firms take on the customers of collapsed providers, the Ofgem announcement came amid speculation that Ovo Energy, another of the industry’s biggest firms, may be considering making a takeover offer for Bulb Energy.
It was announced last Wednesday that Igloo, Symbio and Enstroga had collapsed, taking the number of suppliers that have gone under so far this year to 12. Of the three, Igloo was the biggest, with about 179,000 domestic customers.
Ofgem said the customers had been moved over to E.ON Next after a competitive process designed “to get the best deal possible” for the affected households, and that no one’s supply would be interrupted.
Neil Lawrence, the watchdog’s director of retail, said: “We understand this news may be unsettling for customers; however, they do not need to worry. Their energy supply will continue as normal and customer credit balances will be honoured.”
E.ON Next would be in contact with customers over the coming days with further information, he added.
Ofgem said that if customers wished to switch supplier, they could shop around, but they were being advised to wait until the transfer had been completed. Money that people have paid into their accounts will be protected where they are in credit.
Under Ofgem’s “supplier of last resort” scheme, financially healthy companies take on customers from collapsed rivals. Those households that were on cheaper fixed-rate tariffs, often used by smaller “challenger” suppliers to woo new customers, will typically see their bills increase to the government’s energy cap. For a household with average gas and electricity consumption, this is £1,277 a year.
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There could be further consolidation in the sector over the coming weeks, with Sky News reporting that Ovo Energy is set to table a takeover offer for Bulb this week in an attempt to create the UK’s second largest energy supplier. Ovo has 4.5 million customers, while Bulb has 1.7 million. British Gas would still remain the market leader, with 6.8 million residential energy customers and 450,000 small business clients.
Octopus Energy has previously been named in reports as a supplier that could consider bidding for Bulb, which made a £63m loss in the year to 31 March 2020.
Ovo declined to comment. Bulb said: “From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and lower CO2. Like everyone in the industry, we’re monitoring wholesale prices and their impact on our business.”
