THE energy industry is calling for Government help as it reaches “crisis” point, with fears six more suppliers could collapse before the end of the year.
Wholesale prices have this week soared again, heaping more misery on struggling suppliers.
1
Wholesale energy costs hit 470p per therm this week, creating havoc for suppliers.
It’s almost a TENFOLD increase from February when prices were 48p per therm.
Mark Bennett, Head of Energy at energyhelpline.com said: “This week has seen wholesale energy costs hit record highs and then drop by over 25% back to the rates seen last week, continuing to make things challenging for suppliers.”
Energyhelpline said the price volatility “could see another six suppliers go out of business before the end of December, leaving around 400,000 customers needing to be moved to a new supplier”.
The energy industry has called on the government to step in to help.
In a trading update this week, Good Energy said the situation was a “national crisis”.
Most read in Money
Chief executive Nigel Pocklington said price increases in recent weeks were “unprecedented” and were making it “extremely difficult” to operate for all businesses in the industry.
He said: “No one in the industry is immune. We urge the UK Government to support the industry in navigating these challenges to protect billpayers and those that serve them.”
Emma Pinchbeck, chief executive at trade body Energy UK, said she was “extremely concerned” as household bills are set to increase by almost 50% by spring.
“The last few months of 2021 have seen record wholesale gas prices across Europe, which have already caused huge upheaval in the UK retail market.
“In the last week prices have risen again and are causing issues,” she said.
Already this week, experts warned that household bills were likely to rocket by another £1,000 next year.
It is expected that the energy price cap, which was hiked to £1,277 in October will increase twice next year to reflect the dire state of the market .
Consultancy firm Cornwall Insight said the default tariff price cap could hit £1,865 by April, and an eye-watering £2,240 by October.
It’s a 50% increase on the firm’s previous estimates.
It comes as 4 million UK households are already in the grip of fuel poverty and unable to afford to heat their homes.
What’s happening to the energy market?
Some 26 energy firms have collapsed so far this year, almost halving the number of suppliers in the market.
An estimated 1.8million households have been left without a supplier and seen their bills rocket as a result.
But there are fears that a further 400,000 customers could be left without a provider if more collapse as they struggle to cope with soaring energy costs.
The problem for energy firms is that cannot pass on rising wholesale prices to customers who are on a fixed tariff, meaning that many are operating at a loss.
Pinchbeck said: “There is only so much that suppliers can do in the face of these gas prices.
“Policy and network costs, VAT and the sheer cost of buying gas make up the majority of bills – that means there is scope for the Govenrment to act on this incredibly worrying situation.”
She added: “Without intervention we could see further disruption, and ultimately customers pay the cost of that.”
Wholesale gas prices started going up at a rapid rate this summer.
High demand from Asia and a lack of supply from Russia were blamed for the rise, along with a fire affecting French imports and a lack of wind for turbines.
The UK also imports more than two-thirds of its gas which is subject to global price swings making prices more volatile and likely to rise.
Bennett said: “What is troubling for consumers is the rapid increase in longer term price of energy over recent weeks, which is likely to have a significant knock on effect on the rate of the price cap not just in April, but next October too.
“Unfortunately we are entering a period of record energy prices, and currently this is likely to last well into next year.”
Martin Lewis reveals how households will pay 40% more for steeper energy bills next year
We pay for your stories!
Do you have a story for The Sun Money team?
