The Telegraph

Energy suppliers under scrutiny as three more collapse

Rachel Millard
57 min read
Wind turbines and electricity pylons dominate the landscape at Ince Salt Marshes near to chemical and manufacturing plants on the River Mersey estuary  - Getty Images Europe /Christopher Furlong 
Wind turbines and electricity pylons dominate the landscape at Ince Salt Marshes near to chemical and manufacturing plants on the River Mersey estuary - Getty Images Europe /Christopher Furlong

Every energy supplier has been told to provide detailed information on its finances to the industry watchdog amid fears of a wave of winter bankruptcies as another three companies went bust in the face of surging power prices.

Electricity and gas providers have been sent a letter from regulators at Ofgem to ask if they are at risk of collapse in the next three months.

It came as Enstroga, Igloo Energy and Symbio Energy became the latest casualties of a global gas crunch that has pushed prices in Britain to record highs.

The companies’ combined 233,000 domestic customers will now be moved to new suppliers, where it is likely they will face higher energy bills given the state of the market.

Their exit means that nine UK firms have failed this month alone, with almost 1.7m customers affected.

In the Ofgem questionnaire, firms have been asked if they are at risk of insolvency over the next 30 to 90 days; what their hedging arrangements are; what their cash position is; and how much is owed to customers who have paid their bills upfront.

The letter suggests that officials are seeking to gauge the size of the problem amid concerns that large, stable energy companies will have to take on customers from failures at a massive loss. Several of the former are keen for the Government to step in to help them take on new customers, although it has so far not done so.

Next-day electricity prices are trading at more than four times normal rates, putting huge pressure on smaller suppliers that have not locked down.

An Ofgem spokesman said: “In recent weeks there has been an unprecedented increase in global gas prices which is unfortunately putting financial pressure on suppliers. We are carefully monitoring the market, and as part of that are regularly receiving relevant information from suppliers.

"We also have a robust process in place to ensure that any market exits are managed with as little disruption to consumers as possible and that any potential costs are minimised. In the event a supplier fails, Ofgem’s safety net ensures customers’ electricity and gas supply continue and protects their credit balances.”

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