The gas and power supplier GB Energy Supply becomes the first UK supplier to collapse in a decade, resulting in higher energy bills for approximately 160,000 households.
The three-year-old energy company blames “swift and significant increases in energy prices” for its failure.
“It is with regret that we are informing you that GB Energy Supply is no longer trading,” said Luke Watson, the managing director. “Due to swift and significant increases in energy prices over recent months and, as a small supplier our inability to forward buy energy to allow us to access the best possible wholesale prices, means that the position of the business has become untenable.”
This morning, customers found they were no longer able to log on to accounts. GB Energy Supply has stressed to consumers that outstanding credit balances are protected and they plan to appoint a new supplier as soon as possible.
“There is no need to worry as we will ensure your energy supplies are safe,” said Ofgem’s senior partner for consumers and competition, Rachel Fletcher. “Ofgem are actively working with the industry to ensure your transition to a new supplier is as smooth as possible. While this process is underway our advice is not to do anything as you can continue to rely on your energy supply as normal.”
Ofgem plans to move customers to a “deemed” contract, which are usually more expensive.
“The supplier takes on more risk, as customers are moved to a new supplier quickly without the usual background credit checks. So, they also charge more, to make up for this extra risk.”
Ben Jones, the managing director of Extra Energy, believes that the collapse of GB energy supply will lead to a “domino effect”.
“It’s just a matter of time,” he says, before around half of the UK’s challenger suppliers also collapse due to lack of investment or poor financial strength.