Tipping point looms for energy industry as crisis looks almost certain to claim more suppliers

A million customers are already finding themselves having to move to new suppliers, and it seems certain that there will be more.

9/23/2021 12:47:00 AM

'At what stage will there be a tipping point?This is likely to be the question currently occupying much of the energy industry and government alike,' writes HelenAnnSmith0

A million customers are already finding themselves having to move to new suppliers, and it seems certain that there will be more.

And we can be pretty sure there are more to come.Kwasi Kwarteng, the business secretary, insisted in front of the business, energy and industrial strategy committee this morning that these systems are"robust", but acknowledged they would be"tested" in the coming months.

There is clearly a reluctance to throw taxpayer's money at the problem.He said repeatedly that the industry must first"look to itself" for solutions.His reluctance may be understandable: the conception that these failed firms offered deals that were fine during the good times, but too good to be true when the whole price rose - while also failing to hedge - is pervasive.

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Avro and Green join suppliers quitting household energy market amid gas crisisBetween them they supply 2.9% of the UK’s domestic energy customers.

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Add that to the customers of other firms that have gone under this month, and we're already looking at in excess of a million people being taken on by suppliers like British Gas. And we can be pretty sure there are more to come. Kwasi Kwarteng, the business secretary, insisted in front of the business, energy and industrial strategy committee this morning that these systems are"robust", but acknowledged they would be"tested" in the coming months. There is clearly a reluctance to throw taxpayer's money at the problem. He said repeatedly that the industry must first"look to itself" for solutions. His reluctance may be understandable: the conception that these failed firms offered deals that were fine during the good times, but too good to be true when the whole price rose - while also failing to hedge - is pervasive. Mr Kwarteng has also staked his claim to be firmly on the side of consumers in this crisis - and needs to be seen to be putting their interests first. Please use Chrome browser for a more accessible video player Energy boss: It's 'crunch time' for many small providers But there may well come a point where there is no longer a choice, when even the bigger firms can't afford all these new customers within the current regulatory framework. In that case there are options: a"bad bank", or government-backed loans to energy firms to name just a few. Some energy companies have called for a removal of the price cap, but that would be politically very difficult and thus seems unlikely. The reality is that even if the government does intervene, millions of consumers will face higher bills as the winter sets in - not just those whose suppliers collapse, but also those on standard variable tariffs (the cap is going up in October) and those coming to the end of fixed term contracts. Mr Kwarteng has insisted consumers will be protected, but many may feel that depends on how you define"protection". In the face of bills going up by an average of 25%, on top of a national insurance hike, inflation, the end of the furlough scheme and the end of the universal credit temporary uplift, many are facing a very difficult winter.