Fear of “domino effect” as gas wholesaler stops deliveries.
Fears are growing that a “domino effect” could lead to more energy suppliers going out of business after an important gas wholesaler has left the company.
Pressure continued to build on government ministers to take action on Thursday to resolve the gas price crisis after two other utilities went bankrupt. Another 18 companies are believed to be at risk after wholesaler CNG announced it would stop supplying gas to retail suppliers.
The founder of green power company Ecotricity said phasing out CNG could cause bigger problems. Dale Vince tweeted, “And one gas company that supplies 18 utilities with wholesale gas is about to exit – that could have a knock-on effect.”
The warning came as energy regulator Ofgem sought a new supplier for a quarter of a million customers of Pure Planet and Colorado Energy, both of whom ceased trading on Wednesday. Around two million customers have now been accepted into Ofgem’s Supplier of Last Resort Process.
The regulator emphasized that the customer’s energy supply would be uninterrupted and credits would be transferred to a new supplier.
Pure Planet, backed by oil giant BP, criticized the government and Ofgem for expecting “to sell energy at a much lower price than it currently costs” to buy.
The energy price cap, which sets a maximum that providers can add to their standard tariffs, rose 12 percent in October, but wholesale gas prices rose many times.
“This is not sustainable and so we unfortunately had to make the difficult decision to stop trading,” said Pure Planet.
The company said it was hedged against energy price hikes until next spring, facing large potential losses that led BP to withdraw funding.
On Thursday, there were no signs that pressure on suppliers will soon ease as wholesale gas prices began to rise again after falling from record highs earlier this month.
The most recent supplier failures came when Sir Jim Ratcliffe, chief executive of chemical giant Ineos, warned that high energy prices would last all winter and could lead to industry shutting down.
Sir Jim said a shortage of gas storage facilities in the UK has left the country vulnerable to volatile prices.
Appears on ITVs PestonWhen asked if the country might close due to a prolonged cold spell, he replied, “Yes, then you would close the industry.”
“I think it’s pretty hard to predict how long this current situation will last, but I suppose if you were a bettor you would expect it to last at least the winter because our gas needs are obviously increasing.” in the winter.”
He added that gas is “a very strategic and important requirement for the UK economy and you (the government) need to ensure that the UK economy cannot be forced to ransom because we have not organized our gas situation very well”.
Andy Harris, advisor to energy company Neon Reef, said the energy market is in the middle of a “perfect storm”.
“I think it’s a doomed market and my trust in (Regulator) Ofgem has been weakened a bit,” he told BBC Today.
“We have a price cap and it is right that consumers should not be exposed to extremes and that they should be able to have bills that they simply cannot afford.”
“Unfortunately, the solutions put in place by the government and Ofgem are such that the entire risk falls on the shoulders of the suppliers.”
“So when you experience a perfect storm like now, by definition only the suppliers with the broadest shoulders can absorb these losses.”