Utility Firms going ………Chaos in the market place

I don't believe the firms have been dishonest. It's that the business model used by the new entrants is a deeply flawed one.

The big boys - EDF, EON, BG, SSE etc - all have generating capacity or involvement in gas production back up the line. And that's where they make most of their profits. The big boys can weather the storms because as energy prices go up on the wholesale markets, their generation side takes the benefit. The new boys who are basically retailers, buy energy on the wholesale markets and sell the energy into the retail market. And therein lies the problem. Most retail customers buy their energy on fixed price deals from energy suppliers. The energy prices in the wholrsale markets are not fixed price but are a combination of spot prices and forward prices with some hedging as an insurance policy. When wholesale prices increase - as they have done - the energy retailers are squeezed and go under if squeezed too much as we've seen. They have little resilience.

Ofgem used to stress test all energy companies to ensure that they had the headroom to absorb major fluctuations in energy prices. This was particularly important to the energy retailers who didn't have the back up as generators etc. This stress testing was quietly dropped a few years ago and instead the Govt asked other providers to step in if a reatiler found itself in trouble. There were lots of warnings about the consequences of these changes but the warnings were ignored. And this is what is now playing out. It's chaotic - not helped by the UK's over reliance on gas, the reduced storage it now has after closing acouple of huge storage facilities in the N Sea and below average winds - and unfortunately the market in energy retailing is falling apart. It's a shame for the small companies and their customers as many are now experiencing. Better regulation in energy markets is required.

 

If you want to enter into a contract on the basis of trust, be very careful. Caveat emptor and all that.

But having said that, I think every customer in a monopoly market such as energy retailing should expect the regulator to be looking after the customer's interests. And I don't believe that has been the case for some time in the retail energy market. We wouldn't have this mess if the Govt and the regulator hadn't been asleep at the wheel for some time ignoring the warning signs and the advice provided to them.

 

Most of the smaller suppliers are expected to fail and, of the larger ones, Bulb are definitely struggling. There was a suggestion recently that, by the end of the year, there may be as few as 6 to 10 energy suppliers remaining.

These seem to be the 10 most likely to survive but, with the market being as volatile as it is, even this lot are a long way from being guaranteed to survive:
British Gas
E.on
EDF
OVO (incorporating SSE)
Octopus
Pure Planet
Scottish Power
Shell
So Energy
Utility Warehouse

 

If Bulb go bust, any credit they have of yours is protected.

Normally, you would be transferred to a SoLR (Supplier of Last Resort), but as it's possble no one would be able/willing to take on Bulb's 1.7 million customers, you may be transferred to a special administrator (a sort of government owned company) at least for a while. Whoever you ended up with, your energy rates would almost certainly be at the cap (which goes up by around 12% tomorrow and is forecast to go up by a further 14% in April).

 

The headline cap of £1,277 is not the maximum that can be charged, it is merely an indicative maximum based on a defined 'average' energy usage. The actual amount for each household will vary according to their individual usage and also the region that they are in.