Yahoo Finance Avro Energy and Green collapse as gas price crisis continues
Challenger providers Avro Energy and Green have both collapsed as the gas and electricity crisis in the UK continues.
Ofgem, the energy regulator, said on its website that the two companies had both ceased trading on Wednesday. Utility Point, People’s Energy, PFP Energy, and MoneyPlus Energy have all already collapsed into administration so far this month.
Avro and Green have just over 750,000 customers between them. Customers will continue to receive service and Ofgem will appoint a new provider to take over the accounts in due course.
“Ofgem’s advice is not to switch, but to wait until they appoint a new supplier for you,” Avro said in a statement on its website. “This will help make sure that the process of handing customers over to a new supplier, and honouring domestic customers’ credit balances, is as hassle free as possible for customers.”
Businesses have been sent to the wall by surging gas prices, which have pushed up the cost of wholesale electricity prices. Electricity costs have surged to record levels in the last week, almost four times what it cost as recently as March. Prices have spiked due to a combination of factors including a cold winter and hot summer that ran down gas supplies, a low year for wind, and the loss of capacity due to maintenance work and a fire.
The energy price cap means current wholesale electricity prices make every UK customer unprofitable on paper. Large providers will have hedged their exposure by buying electricity at fixed prices in advance. But smaller companies do not have the financial heft to do this.
Industry sources told the Standard at the start of the week that four suppliers were close to going bust this week. Analysts think 30 companies could be at risk over winter, with some estimates putting it as high as 40.
The government has so far resisted calls to bailout smaller suppliers but is considering giving energy providers loans linked to the number of new customers they take on from bust suppliers.
Business minister Kwasi Kwarteng is resisting calls to scrap or suspend the energy price cap to allow suppliers to adjust prices.
“Our priority is to protect the consumer - and the cap protects consumers,” he said on Twitter.
Prime Minister Boris Johnson has insisted price rises will only be temporary. But experts think high gas prices could remain over winter, forcing the energy price cap to rise by around £250 next April.
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