Energy suppliers going bust



PTR said:
I think the recent rise in gas prices hasn't helped them.

Good thing is that these companies going bust doesn't significantly impact the customers.
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The customers where on low fixed prices so joining everyone else paying the going rate will affect them
Sidewinder2 said:
This.

Does the OP think ASDA grow bananas in Boldon and are knocking up clothes in the quality hotel ????
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Stuff like gas isn't available from that many sources though .unlike bananas and crisps. It's like a just eat version of getting your energy
 
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gards2 said:
Living in China has beem a breath of fresh air for me. NOBODY worries about utility bills. England is a little c*nt sucking on the teat of the USA, which as even bigger more retarded g*nt. It's disgusting how the UK is a pussy to America and at the same time. Shafting it's population, which is exactly what the evil American governament has done for hundrefds of years inc. assasinating it's own preseidents! A truly evil government.

anyway Mr Fish. I get your point.

edit.. There is no incentive to get people off fossil fuels, it might seem like there is but there is not. Not while another 200 trillion of oil, gas, leaves, whatever is still for sale.
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:lol: sounds like a good Friday night over there! I get your point!
 
Dan The Man said:
Yep it’s poorly worded but I’m guessing it’s using seasonality and hoping you would be about £200 credit going into the winter months so your d/d can stay the same amount and you have no debt after April next year
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They'll have some special admin who didn't write what they were expected of.

Basically make a big payment to avoid debt in winter.
 
Pacific said:
i thought you weren't meant to do this until the switch happened. well most things I've read have said that

mines due in a few days. i was quite a bit in credit like so I'm just assuming they won't try and take anything. probably a bit naively :lol:
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Are you not able to adjust your DD? I've always been able to with my suppliers.
I now underpay and just put away a bit each month to pay off the final bill when the contract finishes.
 
gards2 said:
Living in China has beem a breath of fresh air for me. NOBODY worries about utility bills. England is a little c*nt sucking on the teat of the USA, which as even bigger more retarded g*nt. It's disgusting how the UK is a pussy to America and at the same time. Shafting it's population, which is exactly what the evil American governament has done for hundrefds of years inc. assasinating it's own preseidents! A truly evil government.

anyway Mr Fish. I get your point.

edit.. There is no incentive to get people off fossil fuels, it might seem like there is but there is not. Not while another 200 trillion of oil, gas, leaves, whatever is still for sale.
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The energy supply company Del Boys dreamt they’d be millionaires​


Now we’re all being stuck with the bill after firms encouraged to set up from living rooms are failing as gas prices rise​

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ILLUSTRATION: TONY BELL
Ali Hussain, Chief Money Reporter

Saturday September 25 2021, 6.00pm, The Sunday Times
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Just off the busy A473 in Bridgend, south Wales, is Oaklands Road, a quiet residential street lined with semi-detached houses. In 2017, Judith Cook lived in one of them. With a background in renewable energy and environmental consulting, it was here she and her business partner had a bright idea.

There was money to be made from selling gas and electricity to consumers and Cook, then 42, realised how easy it was to set up an energy supplier. You could in effect buy one off the peg. For a fee, a firm handed you the permissions needed to start an energy company, including a certificate from the regulator Ofgem, a computer system and help with how to buy gas and electricity.

Within weeks, Cook had set up just such a company — and so her three-bedroom, pebbledashed semi became the home of One Wales Energy.



At around the same time, 330 miles away in Newcastle upon Tyne, Tim Cantle-Jones had struck on the same idea. The 56-year-old started Future Energy from his detached newbuild sited on a smart cul-de-sac.
The launch of One Wales and Future heralded a surge that would see dozens of energy firms launched by budding entrepreneurs. This week, many — some say most — of the 44 still in business face collapse after a sharp rise in wholesale prices that could see only 10 big names survive. Even a big supplier such as Bulb, with about 1.7 million customers, can be under threat: it is reportedly a takeover target for rival Octopus Energy.

Wholesale gas prices have risen sixfold over the past year and doubled in the past two months amid a global shortage. Britain is vulnerable to shocks because of a lack of storage capacity. France has 14 weeks’ worth, Germany eight and Italy 11. Britain has four days. In the past month, six suppliers and one switching website have gone bust.
Business secretary Kwasi Kwarteng has warned that millions of households could face “longer-term higher prices for gas”, adding that small firms with poor business models will not be saved.
Even before the crisis, many smaller suppliers were showing signs of fragility. Future Energy had started well: by offering cheap deals on comparison websites it attracted 16,000 customers, and in 2018 Cantle-Jones was invited to join a trade delegation to Africa.
But then things started to go awry. One Wales had barely got going before Cook realised she needed £2.5 million to buy the gas and electricity to supply its cheap tariffs, while the back-office demands of looking after customers proved more onerous than thought. The firm was quickly wound down; its last published accounts show assets of just £9,375. Future Energy also went bust, leaving debts of £1.7 million.

​



Among the other entrepreneurs hoping to benefit from regulators’ desire to break the power of the so-called Big Six suppliers were Gurkhas, a 27-year-old semi-professional footballer and councils that thought they could keep bills down for residents. Most failed, leaving other firms, and ultimately their customers, to pick up some of their bills.

How did this come about?​

In 2015, energy supply was dominated by British Gas, EDF, Npower, Eon, SSE and Scottish Power, who between them controlled 90 per cent of the market. British Gas alone had 50 per cent-plus.
Concerned that households were getting a rotten deal, and under pressure from MPs and consumer groups, the Department for Energy and Climate Change began encouraging people to switch. It suggested households could save £200 a year on average. The plan coincided with a boom in comparison websites, which allowed a start-up selling gas or electricity to gain prominence without the need for costly ads. The cheaper their deals, the higher they would appear on best-buy tables.
Spotting an opportunity, companies such as Utiliteam and Utiligroup began offering off-the-peg businesses to entrepreneurs for as little as £10,000: shell companies that anyone could buy, change the name and directors and then start selling, as they came with a licence to supply electricity and gas.
All the new supplier would have to do was set up a website and buy energy on the open market. This could be as straightforward as ringing the trading desk of companies such as Shell, which would quote a price for a certain number of units of gas or electricity.
Once you had the price, you could set a tariff and contact a comparison website that — if you had priced it right — would market your tariff as the cheapest around. It would then send over your new customers’ details.
There was no need to worry about pipes or wires — they were supplied by the national networks. All the energy supplier was doing was in effect taking a note of a household’s meter readings and billing it for the units used. Once the money started flowing in, you could bid for more energy and put out new tariffs.
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From The Times

​


Kwasi Kwarteng, the business minister, has warned that millions of households could face “longer-term higher prices for gas”
WIKTOR SZYMANOWICZ/ANADOLU AGENCY/GETTY IMAGES

Firms off the hook​

Progress was slow to begin with, until a crucial change in the rules in 2016, when Ofgem foresaw a problem should a start-up go bust. Typically, when someone pays their energy bill, they hand over a set amount each month. As a result they are in credit in the summer (when they use less power), which gets run down in the winter. Over a year it all evens out.
But if a supplier went bust owing money to consumers there was a danger those credit balances would be lost, so Ofgem created a “supplier of last resort” scheme. In the event of a firm failing, its customers would be passed on to a bigger firm with its credit balances guaranteed by Ofgem, funded by a levy on the industry. What this meant in effect was that the cost was added to all our bills. Suddenly, starting an energy firm became much less risky, because it would no longer be on the hook for consumer balances.
The result was a market boom. The tariffs offered by new firms were hundreds of pounds a year cheaper than the Big Six and so began to attract huge numbers of customers. In 2015 there were 29 suppliers; by 2018 there were 70. British Gas’s market share halved.
Expecting a deluge, the off-the-peg energy supplier factories created more than 300 dormant energy firms.
But problems soon began to emerge.
In Farnborough, Hampshire, a retired major, Tikendra Dewan, who had served in the British Army for 31 years, set up Gnergy from the hut used by the British Gurkha Welfare Society.
The firm attracted a visit by Amber Rudd, then the energy secretary, but Gnergy soon realised that running a business was not as easy as it had hoped. Like many start-ups, it was blighted by appalling customer service: Gnergy had no phone lines and took weeks to answer customers’ emails.
Then there were other obligations, such as installing smart meters and paying green levies. Many firms started to receive warnings from the regulator.
As the system began to creak, an investigation by The Sunday Times revealed that a number of energy firms were based in family homes. Among them was Cantle-Jones, back in business with a second company, again run from his house, called Northumbria Energy — part of an off-the-peg firm created by Utiliteam. Northumbria appointed liquidators last year.
Ofgem tightened its rules in 2019. Its licensing process became more stringent, with individuals having to prove themselves to be a “fit and proper” person with the resources and appropriate plans to enter the market. You can no longer buy a supplier with a ready-made licence.
But it was too late.

​

​

Next Chunk in a moment
 
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Someone’s making money from gas and electric, but it isn’t most suppliers. The margins are wafer thin. I only have experience of the B2B market, not domestic. But even then you need your head screwed on, with a good senior staff, sensible hedging and trading policy and a really good settlement model (especially in gas, where settlement is unorganised and archaic) to think about making a profit.
 

Last Chunk​

Councils try to cash in​

Local authorities around the UK thought they could cash in. Community supply businesses were launched by councils such as Nottingham, Bristol and Portsmouth, as well as the Scottish government. They spent millions in taxpayer cash to prop up the businesses.
Nottingham City’s Robin Hood Energy — backed by Jeremy Corbyn, who was once a customer via a subsidiary in London — has gone bust. Portsmouth city council’s Victory Energy appointed liquidators last month. The Scottish government’s Our Power went bust in 2019 after receiving £10 million in taxpayer funds. Bristol Energy was sold off last year for £14 million — far less than the £36.5 million the council had invested in it since 2015.
Even before this year, 22 firms had collapsed, 1.32 million customers had been moved to new firms and £61 million had been added to customer bills to pay for failed businesses.
Last year, about 52 per cent of our natural gas was imported. Pressure on wholesale prices is partly due to the rapid decline in the amount of gas produced domestically, forcing suppliers to compete for supplies on the global market.
In 2000, the UK produced 1.26 million gigawatt hours (GWh) of natural gas and imported 26,032 GWh. By 2011, imports beat production for the first time. Last year UK production was 438,520 GWh compared with imports of 478,188 GWh.

Losses mount​

Green levies to reduce carbon emissions have also risen, adding further costs for suppliers. For a typical dual-fuel bill, 34 per cent is the wholesale cost, 25 per cent network costs, 18.6 per cent operating costs and 15.3 per cent covers environmental and social costs.
Ofgem data shows that energy suppliers are on average loss-making, with the profit margin down to -1 per cent. It peaked in 2016 at +4.48 per cent. Of the 49 energy firms still in the market, only six are believed to be profitable.
Joe Malinowski, founder of TheEnergyShop.com, a comparison website, said: “Many new firms were set up without really thinking about how to sustain business long-term ... There are unanticipated cost pressures that have led to many getting into trouble — and that was in ordinary market conditions.
“Under the current extreme events we are seeing, the weaker players haven’t got a chance. Even well-managed businesses are failing.”
Not all small firms are struggling. Good Energy, which supplies about 90,000 customers, said its gross profits were up 19.4 per cent to £17.7 million in the first six months of this year, up from £14.8 million. Nigel Pocklington, chief executive, said: “We have been warning about these problems for years but getting nowhere. The unsustainable business practices of many suppliers are worsening the current crisis. If [a deal] sounds too good to be true, it usually is.”
Greg Jackson, chief executive and founder of supplier Octopus Energy, which is growing rapidly, said: “Anyone looking to start an energy company should have sufficient funding. None of the recent failures had anything like this. And they need a genuine differentiator.
“In a high-revenue, low-margin business like energy, there’s no room for simply piling it high and selling it cheap. Detail matters.”
Ofgem said: “Greater competition has benefited customers and helped to keep prices low. Over the last few years, Ofgem has been introducing a programme of reforms to improve standards in the energy supply market.”
 
I suppose it depends if your in credit, if you cancel and owe money you'll have to pay it later, I seem to recall the ombudsman saying to leave it until you were told to change it.
 

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