These are turbulent times for the UK’s energy sector, not to mention the millions of households they’re licensed to serve.
In recent weeks, several energy companies have gone to the wall, leaving almost two million customers dependent on the safety net provided by the market regulator, Ofgem. The latest, Daligas - with 9,000 domestic and commercial gas-only customers - ceased trading today. Pure Planet and Colorado Energy, went bust yesterday (13 October).
This regulatory backstop is in place to do two things. It maintains supplies to domestic customers, and it protects their credit balances while the energy watchdog moves beleaguered accounts to a new supplier.
Last month, for example, Octopus Energy took over the accounts of 600,000 customers who had previously been with the now defunct supplier, Avro Energy. Meanwhile, British Gas added 350,000 new bill payers from People’s Energy which had also gone to the wall.
Such significant corporate failures are blamed on rising wholesale prices, particularly for natural gas, which has risen in price by 250% since the beginning of the year.
The table below reveals failed energy companies going back to 2016 and the scale of the upheaval in recent months is staggering.
British Gas Evolve
Green Network Energy
Total gas and power
Cardiff Energy Supply Ltd
SSE (currently SSE OVO)
First Utility (currently Shell)
UK National Gas
Green Star Energy
Roughly the same number of customers have been affected by energy companies going bust in September 2021 as had been for the entire period from 2016 to 2020.
The recent spate of closures is evidence of the depth of the current crisis in the energy market. We’ll update the list if, as expected, further corporate casualties are announced.
Energy price cap rise
Earlier this summer, Ofgem announced that its price cap, which limits how much energy firms can charge their customers per unit of energy and associated standing charges, would rise by £139 to £1,277 from 1 October.
It’s worth remembering that this is the figure for a household with typical consumption values; actual bills will always be determined by how much energy is used.
The cap applies to approximately 11 million households on standard variable rate ‘default’ tariffs. The cost of prepayment tariffs is also capped. This figure also rose, by £153 to £1,309, at the start of this month and affects around four million households.
Other tariffs, notably fixed rate, fixed term deals, are not subject to the cap. Prior to September 2021, it was commonly the case for fixed deals to cost significantly less than the level of the cap.
This is no longer the case, however, because of the cost of wholesale energy.
The 12% increase in the price caps on 1 October was intended to allow suppliers to pass on the increased cost of buying bulk fuels. But escalating price rises since the caps were set mean many suppliers are now effectively operating at a loss.
What happens when a supplier goes bust?
The impact of a firm going bust is minimised by Ofgem’s safety net, which maintains their energy supply without interruption, and without customers having to take any action.
It arranges the transfer of customers’ accounts to a new supplier, working with the firms to honour customer credit balances and manage debt repayments.
Once the transfer is complete, each customer is free to move suppliers again if they wish. At present, however, they are unlikely to find a cheaper tariff than their nominated supplier’s ‘deemed’ tariff, which is required to operate within the Ofgem price cap.