Another four energy suppliers have gone bust in a single day as historic gas market highs continue to rip through the UK’s energy market amid fresh fears that Russia may curb gas supplies to Europe.
The energy regulator, Ofgem, said the collapse of four small energy suppliers on Tuesday would leave about 24,000 households in need of a new supplier, and bring the total number of bust energy companies to 17 since the start of September, affecting more than 2 million households.
The flurry of failures follows rocketing global energy market prices due to a sudden surge in demand for gas as economies began to shrug off restrictions related to the Covid-19 pandemic. Gas markets have reached record highs in recent weeks, leading to one of the sharpest increases in home energy bills and fears of a cost-of-living crisis this winter.
Out of the four UK casualties Zebra Power had the largest customer base, and supplied 14,800 households with energy. Omni Energy supplied about 6,000 domestic pre-payment customers, while AmpowerUK had about 600 UK customers and supplied a further 2,000 overseas households. MA Energy had about 300 overseas customers.
Scores more energy suppliers are expected to collapse in the months ahead as gas markets remain at near-record highs, and suppliers are forced to shoulder the higher costs without raising their tariffs above the regulator’s energy price cap.
Consumer charity Citizens Advice said struggling households would ultimately pay the price “with uncertainty, inconvenience and ultimately higher bills” as suppliers continue “to fall like dominoes”.
Gillian Cooper, the head of energy at Citizens Advice, said: “Last week, Ofgem set out how it intends to ‘raise the bar’ for supplier standards and improve their resilience in the short term. This is a positive step, but it’s clear that existing rules and their enforcement, has not been enough.”
Cooper added: “Longer-term, Ofgem will need to do more to make sure companies are financially sound and provide good customer service. This should include protecting people from the loyalty penalty, which prior to the cap allowed companies to profit from those who didn’t or couldn’t switch.”
The energy regulator set out plans for “bold action” last week to fasttrack changes to its price cap, which protects around 15 million households from unfair energy bills, following growing calls from suppliers to make the cap more flexible so that market increases can be passed on to households sooner.
The price cap overhaul has emerged amid deepening concerns that gas prices, which are more than three times higher than this time last year, may resume their upward climb as temperatures plunge across Europe and Russia squeezes gas exports to Europe.
Gas flows from Russia’s state-owned gas giant Gazprom, which supplies about a third of Europe’s gas, dropped significantly over the weekend and on Tuesday the company declined to offer extra gas supplies to Europe from January, when demand is often at its highest for the winter.
The slowdown in gas exports has reignited fears over the winter’s energy suppliers despite a direct order from the Russian president, Vladimir Putin, for Gazprom to focus on filling its European gas storage facilities from 8 November, when Russian domestic storage should be filled.
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Russia’s decision not to open its gas taps to allow extra supplies into Europe from January also defies calls from the global energy watchdog, the International Energy Agency, which said last month that Russia should help to ease market prices by boosting gas exports to Europe this winter.
Moscow has denied it is withholding gas supplies from Europe via its pipelines through Ukraine and Poland to exert pressure on German regulators to approve gas shipments through the new Nord Stream 2 pipeline across the Baltic Sea to Germany.
But its decision to send only contracted volumes despite the strong demand for extra gas supplies is likely to raise gas market prices across Europe, helping Russia to charge more for its hydrocarbon exports.
