Three More U.K. Energy Suppliers Collapse After Price Spike
Three More U.K. Energy Suppliers Collapse After Price Spike
(Bloomberg) --
Three more British energy retailers collapsed on Tuesday, bringing the number of failures to 18 since early August and forcing more than 2 million households to switch suppliers.
The latest casualties were Omni Energy Ltd., AmpowerUK Ltd. and Zebra Power Ltd., with a total of 21,400 domestic customers. Bluegreen Energy Services Ltd., which supplied 5,900 homes, stopped trading on Monday as natural gas and power prices remain triple the usual levels for this time of year.
“In recent weeks, there has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers,” U.K. energy regulator Ofgem said in a statement.
The latest collapses come after warnings from the regulator and Business Secretary Kwasi Kwarteng that more failures were likely. The companies are all relatively small, but the crisis could deepen as an energy price cap for some customers means inadequately hedged retailers are running up huge losses.
“Unfortunately, we may not have seen the end of this situation,” said Justina Miltienyte, an energy policy expert at Uswitch.com, which helps customers change suppliers under normal circumstances.
Ofgem’s plan to redesign the price cap probably won’t help suppliers this winter, according to S&P Global Ratings.
“Suppliers will continue to absorb losses from the price differential between spot energy prices (to the extent they are unhedged) and the price cap through the winter,” S&P said.
Making matters worse, energy suppliers have to pay a contribution toward renewable energy subsidies. Ampower was on a list of companies that hadn’t met a final payment deadline of Oct. 31.
MA Energy Ltd. also ceased trading but it only supplies to non-domestic customers.
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