Two more energy suppliers have collapsed, leaving half a million households to be moved to a new supplier by the regulator.
The latest casualties are Bournemouth-based Utility Point, which supplied gas and electricity to around 220,000 homes, and social enterprise People’s Energy, with around 350,000 domestic and 1,000 business customers.
People’s Energy was founded in 2017 by East Lothian couple David Pike and Karin Sode (pictured) following a crowdfunding campaign. It pledged to return a portion of profits to its customers and to adhere to a “transparent, ethical” way of working. As recently as last August it announced an expansion that would see it hire 100 people in the Borders and partnered with East Lothian Council to offer discounted tariffs to local residents in a bid to tackle fuel poverty.
However, People’s Energy had stumbled recently. A pre-Christmas data breach last year exposed the personal data of 270,000 customers. The supplier ranked second-to-last in Citizen Advice’s customer service league table covering the first months of 2021, perhaps reflecting customer dissatisfaction with the security mishap.
"We are truly sad that we weren't able to make this community-focused approach to energy supply work," People's Energy said in a statement posted on its website.
Utility Point was another recent entrant into the energy market, applying for a supply licence in 2018. But it drew attention for its discounted tariffs and claimed to have grown to be Britain's “15th biggest” supplier.
In a letter to customers, founder and chief executive Ben Bolt attributed the company’s collapse to soaring wholesale costs, pressures from the coronavirus crisis and policy failings by the regulator.
Gas prices in the UK have recently climbed to more than 157 pence per therm compared to under 30p a year ago, he noted. Electricity prices have followed, reaching the “unprecedented level” of £540 per MWh, “more than four times their normal level over the past decade.”
Bolt also suggested the integration of Britain’s electricity market with Europe’s is contributing to the spiralling of power prices.
“It may be worth noting that testing of the Norwegian electricity interconnector [the North Sea Link] continued last week, exporting power out of the UK, even though the UK power market was experiencing a tight system and prices well over £3000 per MWh!“ he wrote.
Bolt also laid blame at the foot of Ofgem’s energy price cap, which he said is requiring all suppliers to undercharge for energy.
Further pressures were put on Utility Point by the support the regulator asked suppliers to provide to struggling households during the coronavirus crisis, which have increased the company’s debt, he added.
“This toxic mix of circumstances and lack of commercial understanding from the certain powers has made it impossible to continue,” he wrote.
Ofgem’s safety net will ensure supply continues uninterrupted for customers of both suppliers and the credit balances of domestic customers are protected. The regulator will appoint a new supplier for these customers through a competitive process over the next few days. Customers are urged to wait to be contacted by that supplier before attempting to switch away to a supplier of their own choosing.
The failure of People’s Energy and Utility Point follow the collapse of PfP Energy and MoneyPlus Energy last week. Customers of the latter two suppliers have already been transferred to British Gas. In total, seven suppliers have collapsed since the beginning of the year, affecting more than two million customers.
More are expected to flounder in the next few months, sunk by the surge in wholesale prices.
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