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Zog Energy becomes 25th UK supplier to go bust in three months

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Another of the UK’s small energy companies has gone bust, bringing the total number of suppliers that have collapsed in the past three months after a record surge in energy market prices to 25.

Zog Energy, which supplies gas to about 11,700 households, announced on its website that it had ceased to trade and that the energy regulator, Ofgem, would appoint a new supplier to take on its customers.

Ofgem has been forced to find new suppliers for more than 2 million households affected by the collapse of energy suppliers since the start of September. The fate of another 1.7 million Bulb Energy customers is yet to be decided by a special administrator, which was appointed to handle the large-scale collapse.

UK energy suppliers that have gone bust in 2021Note: this table does not include MA Energy (2 November) or CNG Energy (3 November), which supply only non-domestic energy customers

Zog Energy was founded in 2012 with a plan to offer households simple, affordable gas tariffs. It said it was “starting with gas” because this was “normally the highest proportion of domestic customers’ annual fuel bill” but did not go on to offer electricity tariffs.

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Bills have rocketed in recent weeks after a global gas supply crunch that has caused the wholesale market price to reach record highs in October, and remain at historic levels as temperatures have plunged.

Neil Lawrence, Ofgem’s retail director, said Zog’s customers “do not need to worry” because the regulator’s safety net process would ensure they have uninterrupted energy until a new supplier is appointed, and their bills would be protected by the energy price cap.

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However, the total cost of managing the fallout of each supplier collapse is likely to pile an extra £120 on to energy bills across Great Britain this winter, according to analysts, which would plunge hundreds of thousands of households into fuel poverty for the first time.

The extra cost burden, on top of rising energy market prices, is used to bridge the gap between the amount of cash left in the bust supply business and the cost shouldered by the new supplier to buy enough gas and electricity from the wholesale market.

Ofgem has promised to put in place tougher stress tests for energy suppliers to prove they have the financial strength to weather a surge in energy market prices as part of a “new reality” for energy retail companies after the energy crisis.