Pure Planet and Colorado Energy have become the latest suppliers to shutter in the UK market.
Ofgem has stepped in to protect their 250,000 domestic gas and electricity customers, and are calling for customers to wait to be appointed a new supplier.
It follows a raft of collapses recently, exacerbated by the high energy prices seen in the UK due to a global shortage of gas along with a number of outages in September. With wholesale gas prices up 250% between January and September, there were nine small suppliers that shuttered last month.
ENSTROGA, Igloo Energy, Symbio Energy, Avro Energy, Green Supplier Limited, People’s Energy, Utility Point, PfP Energy and MoneyPlus Energy all collapsed, and their customers were placed with Suppliers of Last Resort (SoLR), chosen by the regulator.
Pure Planet is one of the largest suppliers to collapse yet, with 235,000 domestic customers. It had launched a new digital electric vehicle charging service in July together with the company’s backer oil and gas major BP, having announced it was eyeing an EV tariff in 2020.
Additionally, the supplier had teamed up with Lightsource Labs to explore the potential of virtual power plants, offering a solar and battery storage solution for UK homes.
Writing in an open letter, Pure Planet’s Andrew Ralston, Chris Alliot and Steven Day expressed their hurt at the collapse of the company, stating “It wasn’t meant to be like this, of course.”
They pointed to how the company was a Which? Recommended Providers, had won a Uswitch award for the best app in energy retail and had recently “passed our Ofgem milestone assessment with flying colours”. They also clarified that they had hedged their energy up till next spring, protecting them to an extent from the surging wholesale power prices and were on track to make their first profits at the end of this financial year.
They pointed to the price cap to explain their collapse, saying the surging wholesale prices clashed with a domestic staid government and regulatory policy.
“Simply, the rules prevented us from covering our costs,” the letter continued. “We are being forced to sell energy at prices way below the true cost. That’s wiped out those forecast profits and turned them into a thumping great loss, with even more risk on top. While we appreciate the price cap is a way to protect consumers; there is no policy designed equally to protect suppliers from the very same enormous wholesale prices rises we have seen these past few months. This creates an imbalance and the result is insolvency. And it’s why so many suppliers have folded this year.
In a statement provided to Current±, Pure Planet noted that given the increasing risks and large potential losses of operation in the current market, bp chose to withdraw its support meaning the supplier was no longer able to continue.
Colorado Energy is one of five suppliers that Ofgem is consulting on issuing final orders to, following its failure to make £883,182 worth of Renewables Obligations. Additionally, it was issued with a provisional order by Ofgem for failing to pay into the feed-in tariff (FiT) scheme in September.
The supplier was one of three expelled from Elexon’s Balancing and Settlement Code yesterday (13 October), a move that means Colorado – along with MA Energy and GoTo Energy – are unable to take on any new customers.
Collapsed supplier Avro was also expelled from the BSC just prior to it shuttering, along with AMPower UK and Delta Gas And Power.
The surge in collapses has caused concern throughout the sector, with energy secretary Kwasi Kwarteng convening a roundtable to explore routes forwards. Key to these discussions was the importance of building a “strong, home-grown renewable energy sector” to mitigate against further gas price turbulence.
Pure Planet called on Kwarteng to go further to protect suppliers, pointing to the government’s support of other energy-intensive and related businesses such as steel and glass.
“It seems illogical to us to not support the supplier sector also. Failure to have done so, puts another 200 jobs at risk today, and will cause disruption to our Members who will now be moved to a supplier they did not choose. It reduces choice, threatens Net Zero innovation and will lead to increased costs for consumers,” the company stated.
“Kwasi Kwarteng says the price cap is non-negotiable. Fair enough. But that doesn’t mean helping supply companies needs to be non-negotiable too. If he doesn’t act fast, he’ll have no suppliers left to be Minister of.”
Moving into winter, further high gas and power prices are expected to continue, and National Grid ESO has warned of constraints on the UK electricity network.
Given these conditions, further supplier collapses are expected with research from Baringa suggesting that as few as 10 suppliers may be left by September 2022.
Already, Omni Energy has warned that it is expecting to fail by the end of November, and advised its customers to switch now to avoid being placed with a SoLR.
Energy major Bulb is also reportedly exploring funding opportunities amid the power price squeeze, although it told Current± that it buys a large amount of its power in advance and this is just it investigating its options as it looks to “further its mission”.