Britain’s biggest energy supplier has once again stepped in to absorb the customers of a toppled company.
Regulator Ofgem announced on Tuesday that the approximately 35,500 customers abandoned by the collapses of Neon Reef and Social Energy Supply last week will be transferred to British Gas.
Both firms had been impacted by the surge in wholesale energy costs, which has felled 22 energy companies since September and left four million households in a lurch.
The supplier of last resort (SoLR) mechanism has handled all but one of those failures, transferring nearly 2.5 million households to a surviving company. In this process, customers' electricity and gas suppliers continue as normal and domestic customers have their credit balances protected.
So far British Gas has absorbed more than 500,000 of the accounts abandoned in 2021. Chris O’Shea, chief executive of British Gas parent company Centrica, said the firm is in a financially robust position and “as a responsible energy supplier built on a sustainable model we are well hedged for the winter.”
While other energy suppliers have been foundering in turbulent wholesale market, British Gas in September promised to freeze the direct debits of customers until February, for savings worth an estimated £50 per household. It's not known if customers acquired by British Gas through the supplier of last resort (SoLR) process will benefit from the freeze.
During the latest crisis, British Gas has also been appointed supplier of last resort (SoLR) for PfP Energy, MoneyPlus Energy, People’s Energy, Zebra Power Limited, and Bluegreen Energy. It also took over the around 50,000 accounts abandoned by the failure of Simplicity Energy in February.
“We’ll continue to do what we can to help stabilise and support the sector and work as part of wider industry efforts to drive regulatory reforms which are urgently required,” O’Shea said.
He previously warned that the failure of so many suppliers will add between £100 and £200 to every household’s energy costs over the coming years. Suppliers of last resort can recover some of the cost of refunding credit balances and migrating accounts through an industry levy. British Gas said it “will do everything it can to minimise those costs.”
Meanwhile, the collapse of Bulb this week will be handled by another mechanism. The company’s 1.7 million customers will be served by an energy administrator after it was deemed impossible for any one energy company to take them over. The government will meet the costs of the bailout, forecast to be £1.7 billion.
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