1.5 million households face rising energy bills - why gas prices are increasing
Another 800,000 households face higher energy bills following the collapse of two more suppliers amid warnings that prices might not return to normal until 2023.
Six companies in total have collapsed this month leaving 1.5 million households set to pay hundreds of pounds a year more as they are transferred to new suppliers.
Experts warn gas prices are likely to remain at an “exceptionally high level this winter” and stay at “elevated” levels next summer before returning to normal the following year.
Yesterday, Avro Energy became the biggest energy supplier to fold, with 580,000 household customers. Green, which has 255,000 customers, also ceased trading yesterday.
Affected customers will still receive energy while a new supplier is appointed by regulator Ofgem.
Industry sources fear there may be as few as 10 suppliers left by the end of the year.
Which suppliers have gone bust?
People’s Energy, Utility Point, PfP Energy and MoneyPlus Energy all ceased trading in September.
Avro Energy and Green are the latest casualties making thousands more customers facing being switched to a potentially more expensive provider.
These smaller firms account for more than five per cent of the UK energy market - about 1.5 million customers.
There are fears more suppliers could go into administration in the following months. Bulb, the UK’s sixth largest energy company with 1.7 million customers, is currently seeking additional financing.
What has been said?
Neil Lawrence, director of retail at Ofgem, assures that the regulator will do its all to protect customers, with this being its “number one priority”.
However, Ofgem has acknowledged that the cost of protecting customers from failing providers could lead to higher bills.
Lisa Barber of consumer rights group Which? said: "Ofgem will appoint new energy suppliers to take over and protect any credit customers have so they can be reassured they won’t be cut off or lose their money. We’d recommend taking a meter reading as soon as possible to ensure the transition is as smooth as it can be."
30,000 people have been checking their energy advice pages online in recent days, Dame Claire Moriarty, chief executive of Citizens Advice, told the BBC.
Why are gas prices rising?
A combination of factors coupled with a high global demand have seen gas prices soar in recent weeks.
The delay in planned maintenance work on electricity plants has meant around 20% of the UK’s nuclear power stations are currently offline.
A dip in energy from solar and wind sources, due to recent weather, has also caused an imbalance between supply and demand.
Households have been protected by the immediate cost by the energy price cap - the maximum price customers can be charged.
The cap is set to rise by £139 a year starting from 1 October 2021 and will be reviewed again by Ofgem in six months time.
A version of this article originally appeared on NationalWorld.com