At least four of the smaller UK energy companies are expected to go bust next week amid soaring wholesale gas prices.
In a recent article published on BBC, it has been revealed that four firms have asked larger players to bid to take over the supply to one million customers.
The price rise has left some companies unable to provide their customers with the energy they have paid for. Industry rules mean supplies will continue for affected customers, and they will not lose money owed to them.
The new company is also responsible for taking on any credit balances the customer may have. But paying that credit out to customers is a further disincentive for companies to take on new business.
Business Secretary Kwasi Kwarteng tweeted: “Some energy companies are facing pressure. Ofgem has robust measures in place to ensure that customers do not need to worry, their needs are met, and their gas and electricity supply will continue uninterrupted if a supplier fails.”
The government added that if the company is not taken over there were processes in place to appoint a special administrator to temporarily run the suppliers.
It came after the government held talks with representatives from the energy industry amid growing concern about the impact of the spike in wholesale gas prices on households and businesses, including food manufacturers.
The government said the business secretary was reassured that security of supply was not a cause for immediate concern within the industry.
“The UK benefits from having a diverse range of gas supply sources, with sufficient capacity to more than meet demand… the UK’s gas system continues to operate reliably and we do not anticipate any increased risk of supply emergencies this winter.”
Mr Kwarteng said: “Our largest single source of gas is from domestic production, and the vast majority of imports come from reliable suppliers such as Norway…
“However, our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to further reduce our reliance on fossil fuels.”
The business secretary said he will have further talks with Ofgem on Sunday to discuss the issues raised by the industry, and on Monday he will seek a further meeting with industry figures “to plan a way forward”.
Four small suppliers ceased trading in recent weeks, including Edinburgh-based People’s Energy, which supplied gas and electricity to about 350,000 homes and 1,000 businesses, and Dorset-based Utility Point which had 220,000 domestic customers.
At the beginning of 2021 there were 70 energy suppliers in the UK. Industry sources say there may be as few as 10 left by the end of the year.
Government sources have said the impact on small energy companies that might be the most exposed was being monitored.
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