Menu Close

BP-backed renewable energy firm becomes one of latest suppliers to collapse

Check credit my

Pure Planet, a renewable energy firm that was backed by the oil company BP, and Colorado Energy, have become the latest energy suppliers to collapse under the weight of soaring gas prices.

In a statement, Pure Planet blamed the UK’s energy price cap for its failure and lashed out at the business secretary, Kwasi Kwarteng, who has said there would be no taxpayer-funded bailouts for struggling energy companies.

Pure Planet’s three co-founders wrote that they were “being forced to lose money through a combination of sky-rocketing global wholesale energy prices clashing with a domestic staid government and regulatory policy – the price cap”.

“Simply, the rules prevented us from covering our costs,” they added.

The two firms’ collapse means 14 gas and electricity suppliers have failed this year. The founders of Pure Planet echoed widespread predictions that more energy firms would go bust before the end of the year “unless something” changesd.

While some energy suppliers have faced criticism for failing to “hedge” against high energy costs, reducing the impact of sky-high prices, Pure Planet said it had hedges in place to last until Spring. But it said BP has chosen to withdraw support for the company owing to the risk of “large potential losses” by continuing to operate while gas priceswere high.

Pure Planet had 235,000 customers, while Colorado Energy had 15,000. The customers will be transferred to new suppliers by the regulator Ofgem under the supplier of last resort scheme.

While Colorado offered little detail on its collapse, Pure Planet co-founders, Andrew Ralston, Chris Alliott and Steven Day, criticised the government’s decision not to support energy suppliers.

  Want the perfect job? It’s £44k for a four-day week – but you have to go into the office

Credit beureau

They said the refusal to provide support was “illogical”, putting its 200 staff at risk and impeding innovation to reach net zero.

“Kwasi Kwarteng says the price cap is non-negotiable. Fair enough,” they said. “But that doesn’t mean helping supply companies needs to be non-negotiable too. If he doesn’t act fast, he’ll have no suppliers to be minister of.”

The impact of high gas prices had already claimed 12 energy suppliers before Wednesday, including 10 since the start of August. The number of companies in the sector has been widely predicted to decrease from about 70 at the beginning of the year to fewer than 20 this winter.

The wave of failures has left Ofgem needing to find new suppliers for more than 2m customer accounts under its supplier of last resort scheme, which is designed to move people to new suppliers seamlessly, with no interruption of supply.

But the sheer volume of customers of failed suppliers has led to speculation that Ofgem could be forced to use its special administrator safety net, as yet untested, under which a specialist firm could be parachuted in to run a failed operator. The City consultancy Teneo has held discussions with Ofgem about performing the role.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Last week, Ofgem’s chief executive, Jonathan Brearley, admitted that the regulator needed to build a “more resilient” regulatory system after criticism that too many small and inexperienced suppliers with poor financial strategies had been allowed to enter the market to supply households with gas and electricity.

  Airbnb fraudster checked out with my keys and £600 speakers

On Wednesday evening, Ofgem’s director of retail, Neil Lawrence, said: “I want to reassure affected customers 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 account the funds you have paid in are protected and you will not lose the money that is owed to you.

“Ofgem will choose a new supplier for you and while we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your tariff.”