Gas price surge and energy price cap have contributed to demise of 25 firms since August
Entice Energy and Orbit Energy have become the latest gas and electricity suppliers to go bust, taking the total number of collapses to 25 since August.
Macclesfield-based Entice and London supplier Orbit both announced they would cease trading on Thursday in the latest development of an ongoing crisis in the UK’s energy market.
In a letter to customers, Orbit blamed Ofgem and the government for its collapse. The company said it had always been a “well-run supplier” that took a “prudent approach” to buying energy but could no longer survive because of the way the energy price cap has been operated.
“Sadly the UK government and our regulator Ofgem expects us to sell energy at a price far lower than the cost to buy – which makes operating unsustainable,” the company said.
“It is with a heavy heart that I write to you, our loyal customers, to let you know that, despite our best efforts, supplying energy to UK households is no longer viable.”
Customers will be transferred to other suppliers and will not see an interruption to their gas or electricity. Credit balances will also be protected.
Suppliers have been hit by a surge in gas prices, with little respite expected until spring 2022.
The energy price cap, which is set at a rate equivalent to £1,277 per year for an average household, means that suppliers are losing money on many of their customers. The cap is not due to be revised until early next year, with the new rate brought in on 1 April.
Experts have forecast that only 10 companies are likely to be able to survive that long unless the government intervenes further in the market. At the start of 2021, there were 71 energy suppliers in the UK.
Verlede week, Ofgem ordered five energy suppliers to pay their contributions to a scheme to support renewable energy production. Orbit missed its payment of more than £451,000.
The business secretary, Kwasi Kwarteng, has pointed the finger at “badly run” firms, saying in September that the government would not “throw taxpayers’ money” at suppliers that went bust because of poor leadership.
On Wednesday it was revealed that the government had earmarked £1.7bn to ensure that Bulb – the UK’s seventh largest supplier – could continue to provide energy to its customers after administrators were appointed this week.
The funding commitment means each of Bulb’s 1.7 million customers is being supported with £1,000 of public money while special administrators Teneo seek a long-term solution that could mean a sale of the business or transfer of customers to other suppliers.
Tax and advisory firm Blick Rothenberg said the government must do more to support smaller suppliers.
“The government needs to consider setting up a special business loan scheme for small providers or a resetting of the price cap for a limited period, or more energy businesses will fail,” said Simon Rothenberg, a director at the firm.
“A special loan scheme would be preferable to leaving things to the last minute and then having to run a business through special administration.
“If the government does not intervene, the energy market will be back to the big six providers only and consumers will not have the flexibility that they have enjoyed up until now.”
Ofgem and the government have been contacted for comment.