Pure Planet and Colorado Energy go bust as customers face footing the bill for switch



Collapsed energy suppliers have warned that many customers could face a hike in bills totalling up to £4bn as more firms look set to go bust this week.

The upheaval could see well over £100 added to bills for the average consumer on top of price hikes already waved through by the regulator.

Pure Planet and Colorado Energy were the latest suppliers to go bust today as smaller companies struggle to pay higher wholesale prices for gas.

Pure Planet, which has 235,000 customers, was backed by BP – and failed after being refused further funding. Colorado serves 15,000.

Green and Utility Point, which both ceased trading in September, told i that Ofgem, the energy regulator, did not do enough to offer support to failing suppliers. So far 14 firms have gone to the wall this year.

Reports that up to seven suppliers could go bust this week amid the soaring wholesale gas prices were unsurprising, they said.

The other struggling firms that have been named in reports include Zebra Energy, Ampower and Neon Reef. Together they supply energy to hundreds of thousands of customers.

Steven Redmayne, chief operating officer for Green, said he had hoped action would have been taken before other firms found themselves in a similar position to his.

“Throughout Covid, every month, every energy supplier had to submit data to Ofgem about their financial stability.

“As the rhetoric has been about bad businesses, if that was the case, why did Ofgem or the Government not step in [during] the last two years? If we’re all badly run businesses, you had this data, what did you do with it?”

He warned that the costs of failing firms would be spread over every remaining energy supplier, which would then pass them on to customers on variable tariffs and on fixed tariffs when these come up for renewal.

“All these energy supplier failures, there’s a cost to this. It’s the cost of moving these customers, the system costs, costs of buying energy at this very expensive time, extra man hours to do this,” he said.

Mr Redmayne, whose firm had 90,000 customers, said conservative estimates put the total cost of supplier failures at £1bn – but should larger suppliers go to the wall, which would affect more than one million customers, “that’s going to go up to £3bn or £4bn very quickly”.

Andy Harris, chief information officer at Utility Point, said putting a figure on the financial burden for customers was tough but it could add up to hundreds of millions of pounds.

“People in the industry were saying to the Government and Ofgem months before it happened that there’s a problem coming but they wouldn’t listen for whatever reason.

“The problem with all suppliers being allowed to fail and the talk about the price cap protecting consumers, is somewhat misleading, unfortunately.

“When these suppliers fail, a number of the costs are then covered by the remaining suppliers and… are then included in the [energy] price cap calculations.

“When they calculate the next price cap, all of these charges will be rolled up into that calculation and everybody will be paying a higher bill as a consequence of supplier failures.

“The price cap increase will not be just because of rises in wholesale costs.”

He said most of the energy-supplier industry was in agreement that the number of firms could dwindle to around 10, from between 40 and 50 at present.  

Dr Lawrence Haar, a senior finance lecturer at Brighton Business School, sought to allay customers’ fears about price hikes, saying of the failing suppliers: “As these firms are not helpful and add no value, I have no reason to believe that consumer prices for electricity will be affected, or made even higher by their departure.

“Indeed, as re-sellers trying to earn a margin for doing very little, their departure in a small way might be beneficial.”  

Ofgem said: “Ofgem’s number-one priority is to protect customers. We know this is a worrying time for many people. 

“The energy price cap covers around 15 million households and will ensure that consumers don’t pay more than is absolutely necessary this winter. 

“Any customer worried about paying their energy bill should contact their supplier to access the range of support available.”



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