THE collapse of dozens of energy firms will add at least £85 to household bills from next April, according to the first official estimate from regulator Ofgem.
But it added the total cost could go up even further if global gas prices continue to rise.
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The bills rise on struggling families does not include the failure of Bulb, which collapsed and was placed in a special administrative process last month.
Bulb’s exit from the market was backed by a £1.7 billion loan from the taxpayer after none of the “big six” energy firms was willing to take on its 1.6 million customers as a supplier of last resort.
That avoided a further £45 addition to average UK household bills if the supplier of last resort route was used, Ofgem said in newly published court documents.
Ofgem’s figure is more optimistic than a recent analysis by Investec Bank Plc, which estimated a £3.2 billion cost of Bulb’s collapse to the taxpayer, Bloomberg reported.
That would be an average hit of £120 per household.
Ofgem had refused to publish the legal documents, but an appeal by the Financial Times and Bloomberg to release the papers was granted by a judge today.
The latest cost of living crunch comes on top of soaring wholesale gas prices which could see the government’s energy price cap raised by hundreds of pounds next April.
Record gas costs have caused the collapse of 28 energy firms in 2021 – including 25 since September.
More are expected to go bust in the coming weeks, contributing further to expected energy bill rises over the next few months.
Ofgem estimated that given the number of failed suppliers so far this year, extra costs for each consumer in 2022-23 will amount to £80-£85.
But they advised we take that sum with a pinch of salt, as the collapse of more firms and further increases in wholesale gas prices could raise the figure further.
Equally, a fall in the price of wholesale gas could benefit British households and reduce the £80-85 estimate.
Ofgem wrote: “The current £80-£85 estimate of costs per household should be treated with caution.
“It will continue to move up and down into next year as global gas prices remain volatile.
“We’re continuing to work with government and consumer groups to keep costs on customers’ bills as manageable as possible.”
Small firm Zog Energy was the latest to go bust, leaving 11,700 UK homes without an energy supplier.
Orbit Energy and Entice Energy both collapsed last week, affecting a further 70,400 customers.
Eleven more are expected to exit the market before the end of the year, with Brits’ annual bills set to soar to over £2,000.
Brits whose supplier goes bust have been advised to take a meter reading and not to switch, as they will stay covered by Ofgem’s price cap and may see higher bills if they change supplier.
Martin Lewis explains what you need to do about energy bills as gas prices soar
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