Failures in the energy sector could end up costing the taxpayer billions, an industry executive warned today.
Andrew Lindsay, co-chief executive of Telecom Plus, which trades as Utility Warehouse, said: “Consumers face a cost running into billions of pounds to tidy up the mess.”
Lindsay’s comments came a day after Bulb became the largest energy supplier to go bust due to sky-high gas prices. Bulb’s collapse means almost 4 million customers have seen their home suppliers collapse this year, with more than half of suppliers falling over.
Bulb has 1.7 million customers and its size has forced the government to effectively nationalise it to ensure continuity of supply while a more permanent solution can be found.
UNISON general secretary Christina McAnea said: “Every time a company goes under, it’s energy customers that pick up the tab. Bulb’s collapse could mean as much as £150 extra for each household on next year’s energy bills.
“That’s on top of the £150 everyone will already be paying for the numerous other suppliers who’ve gone to the wall since the summer. These huge hikes will hit everyone – and low-income families the hardest.”
Industry insiders want regulator Ofgem to overhaul the government’s price cap, which many blame for the collapse of suppliers. The price cap means the spike in energy prices has left every supplier losing money on all their customers.
Lindsay said: “We welcome Ofgem’s commitment to prevent this situation from happening again.”
The energy crisis has been good for Utility Warehouse, which lets customers bundle all their household bills into one statement and claims to save customers money.
Utility Warehouse signed up 15,000 new customers in October alone. That was over four times as many as it signed up in the previous six months.
The company uses multi-level marketing to promote itself and Lindsay said: “The emerging cost of living crisis is driving increasing numbers of new Partners to join us.”
Telecom Plus’s first half revenue was up 6% to £371 million but pre-tax profit dipped by £1.5 million to £26.2 million after a recent settlement with Ofgem for failing to treat struggling energy customers fairly.
Telecom Plus shares rose 52p to 1348p, valuing the business at just over £1 billion.
Elsewhere, Paypoint today agreed to pay £12.5 million to avoid a full blown competition probe. Ofgem was in the early stages of investigating whether exclusivity clauses in Paypoint’s contracts with retailers breached the rules. Paypoint has outlets partnership with 28,000 retailers across the UK that allow people to top up their electricity meters.
Paypoint has agreed to remove the exclusivity clauses in its contracts and will pay £12.5 million to Ofgem’s voluntary redress scheme.
PayPoint shares rose 9p to 657p.