Igloo Energy, Symbio Energy and Enstroga are the latest victims of the energy crisis. Their collapse yesterday means nine suppliers have folded in the last month as the result of soaring wholesale gas prices, affecting 1.7 million households.
The demise of these suppliers wasn’t unexpected. Both Igloo and Symbio missed deadlines to pay into the feed-in tariff (FiT) scheme earlier this month, a sign they were struggling financially. Last week Igloo, which served 179,000 households, appointed professional services firm Alvarez and Marsal to advise it about a possible insolvency process.
Symbio’s troubles pre-date the surge in natural gas prices. The mid-sized supplier has regularly missed deadlines to pay green taxes, to the extent that Ofgem opened an investigation into its noncompliance in January and as recently as August cautioned that it could strip the company of its supply licence.
There were other signs of cash flow problems and poor management at the Watford-based supplier. In online reviews, Symbio customers reported that the supplier ignored meter readings they provided, issued bills with inflated estimates and was slow to refund credit balances. Some speculated that the company was exaggerating their usage to bolster its cash flow. The company later earned a slap from Trustpilot after it responded to some of these reviews in a “threatening” manner.
Symbio supplied around 48,000 households, while Enstroga had 6,000 customers.
Gas and electricity will continue uninterrupted to the 233,000 households impacted by these failures, and the credit balances of domestic customers will be protected.
Ofgem will appoint new suppliers for deserted customers through a competitive supplier of last resort (SoLR) process but the search may be more difficult than in previous years. Several energy suppliers, including mid-sized Utilita and Good Energy have said they aren’t equipped to absorb hundreds of thousands of customers. Even Scottish Power, one of Britain’s largest energy companies, said it isn’t interested in taking on potentially billions of pounds of liabilities from customers who will, as a result of the price cap, be paying less than it costs to supply them this winter.
Suppliers’ reluctance to absorb orphaned customers has led to speculation that the supplier of last resort (SoLR) mechanism may collapse this winter. The government has weighed issuing state-backed loans to surviving companies to help them accommodate potentially millions of homeless energy customers.
Business secretary Kwasi Kwarteng has also suggested that the government might appoint a special administrator to run failed suppliers, although energy executives say this would entail effectively creating a nationalised energy company.
But Ofgem did find energy companies (Octopus and Shell Energy) to absorb the more than 800,000 households deserted by the failure of Avro Energy and Green last week, and will hopefully find bidders for customers of Igloo, Symbio and Enstroga. Customers of those suppliers are urged to sit tight until they are contacted by their appointed supplier of last resort and not to attempt to switch away at this time.
But while costs are limited by the energy price cap, bills will likely be higher than the bargain rates their collapsed supplier charged.
Research from Citizens Advice estimates that transferred customers will typically pay £30 per month more for their energy than before. The consumer champion says that sudden price hike could be devastating for families whose finances are on a knife-edge and may push some to turn down their boilers and switch off fridges and freezers.
Chief executive Clare Moriarty said: “Overnight price hikes will be a shock for more than a million households whose energy companies have gone bust. We’re particularly worried about those who’ll face desperate choices this winter because of the cumulative impact of soaring bills, the planned cut to universal credit and inflation.”
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