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Together Energy becomes first supplier to collapse in 2022 amidst continuing high power prices

The collapse of the 27 suppliers last year, along with Together Energy now, has driven up the cost of the SoLR mechanism to £2.6 billion.

The collapse of the 27 suppliers last year, along with Together Energy now, has driven up the cost of the SoLR mechanism to £2.6 billion.

Together Energy has become the first supplier to collapse in 2022, as power prices remain high.

In a statement, the Warrington Borough Council part-owned supplier thanked customers for their support over its five years of operation.

“Despite press reports, we did buy enough gas and electricity for your needs, but the sustained increase in wholesale prices and the securities required to continue to forward purchase the energy, have meant that it is untenable for us to continue,” it stated.

Power prices surged towards the end of 2021 as, due to a Europe-wide shortage, gas prices grew to around 500% their rate at the beginning of the year.

Thus far customers have been largely protected from the growth in wholesale power prices by the price cap, however this is expected to increase by almost 50% when it is reset for the next price period in April. This could have a significant impact on consumers, with 6.3 million facing fuel stress as a direct result according to charity the Resolution Foundation.

In 2021, the strain of surging prices, which suppliers could not recoup from consumers due to the cap, led to 27 energy suppliers collapsing.

This included: Zog Energy, Orbit Energy, Entice Energy, Bulb, Social Energy Supply, Neon Reef, Omni Energy, MA Energy, Zebra Power, Ampoweruk, CNG Energy (electricity and gas), Bluegreen Energy Services, Goto Energy, Pure Planet, Colorado Energy, Daligas, ENSTROGA, Igloo Energy, Symbio Energy, Hub Energy, Green Network Energy, Simplicity Energy, Avro Energy, Green Supplier, Utility Point, People’s Energy, PfP Energy, MoneyPlus Energy and Hub Energy.

All but Bulb’s customers were placed into the Supplier of Last Resort (SoLR) mechanism, which is expected to cost approximately £2.4 billion, according to analysis from Cornwall Insight. This alone equates to an increase in bills of £90 per household.

Meanwhile, Gillian Cooper, head of energy policy for Citizens Advice, said the costs of supplier failures now reach £2.6 billion.

“With the price cap expected to go up again in April and the cost of living soaring, many are already facing impossible choices between heating and eating.

"The government must spread the cost of supplier failures so people aren’t left to foot a sky-high bill for chaos in the energy market, just as prices rise. It should also provide a one-off payment to people through the benefits system this April for those who need the most support," Cooper said.

How to tackle the energy crisis and protect customers from surging power prices without compromising the energy transition has become a key question for government, with MPs, charities and energy companies calling for action.

Cuts to VAT, a windfall tax of north sea oil and gas producers and changes to the Warm Home Discount scheme are amongst the most popular potential pathways to mitigate the impact. The government is expected to announce its measures by the end of the month, and ahead of Ofgem announcing the new cap on 7 February.

Together Energy was one of five suppliers issued with provisional orders by Ofgem in November 2021 over a total of £17.9 million of outstanding Renewables Obligation (RO) payments. The company owed £12,402,390.00.

Its 176,000 customers – including those which form part of its subsidiary Bristol Energy – will now be protected by the SoLR mechanism, and placed with a new supplier chosen by Ofgem.


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