Yahoo Finance Half of energy suppliers 'at imminent risk of collapse'
More than half of Britain's remaining small energy suppliers are at imminent risk of collapse, as wholesale prices remain high.
Of the 22 gas and electricity suppliers left outside of the largest six, 12 have negative assets on their balance sheets, according to accountants Price Bailey.
This means they are technically insolvent and at risk of collapse, the firm said. Of these, half are deemed “maximum risk” because of their poor credit scores.
This includes suppliers that have taken on accounts from other failed firms. Customers could face the inconvenience of being transferred multiple times if these firms were to collapse.
Since the energy crisis began last autumn 27 energy firms have gone bust, roughly half of suppliers. Natural gas prices have climbed six-fold, but the energy price cap has prevented companies from immediately passing costs on to customers.
Price Bailey's Matt Howard said: “The winter of discontent for the energy supply sector is unlikely to end soon.
"These businesses will find it almost impossible to access extra funding unless directors provide personal guarantees, and few are likely to do so in the current climate.”
This month Clydebank-based Together Energy, which had 170,000 customers, became the latest firm to collapse. The largest supplier to fail so far was Bulb, which was put into special administration as it had too many customers to be taken on by other firms.
From April, the energy price cap is widely expected to rise, which would shift some of the burden of wholesale prices away from suppliers and onto households.
Meanwhile the Government is under increasing pressure to intervene, with a potential cut to VAT on bills reportedly under consideration.
Mr Howard added: “We are seeing a domino effect. Every time a small energy retailer goes bust, that increases the financial strain on the rest of the ecosystem, making those businesses more vulnerable to collapse.
“The business models of many of the small suppliers are not sustainable in an era of rising wholesale prices. Many of the smaller businesses are failing because they did not buy energy in advance."
Last month a damning report from charity Citizens Advice said regulator Ofgem had “failed to act against unfit energy suppliers for nearly a decade”.
Dozens of new energy companies were launched in the past decade but many had little financial backing. The charity claimed the regulator failed to act even as evidence of financial weakness in the market grew.
Citizens Advice estimated the latest spate of supplier collapses would add £94 to the typical household energy bill.
