Half of energy firms 'could go bust'
Energy firms could be about to go bust en masse, forcing prices through the rough for unsuspecting customers.
Shocking information reveals half of energy suppliers "could go bust in the next few years" due to a crowded gas and electricity market - and it will push up prices for customer.
Earlier this week, small energy firm Solarplicity went bust leaving 7,500 households in limbo as the regulator Ofgem scrambles to find a new supplier for these customers.
While today, Ofgem announced it has revoked the licence of URE Energy sparking fears it will soon stop trading.
Solarplicity was the 14th energy supplier to collapse since the beginning of last year and Mark Todd, co-founder of comparison site Energyhelpline, warns that at least another 15 firms will go out of business in the next few years.
He said: “With the energy price cap dropping, and even huge suppliers such as Npower, British Gas and SSE all in trouble, we are expecting a spate of suppliers to fold or exit the market over the next six months.
"We are expecting a dramatic change this autumn and it could be something like a Game of Thrones showdown.
“At 60 suppliers there are simply too many for the market to sustain.
“This is likely shake down to 30 to 45 over the next few years in a huge consolidation
“Prices are likely to rise with more bankruptcies as competition weakens.”
Lots of smaller energy firms are finding it hard to get new customers.
It means that they set their prices really low, often taking on customers at a loss.
After a while it means their businesses aren’t viable, they run out of money and then fold.
In April, Ofgem announced new tougher tests for suppliers and it is currently consulting on what checks need to be done on current ones and what happens when a supplier exists.
At present, when an energy firm folds Ofgem takes charge and negotiates finding a new supplier for all its customers.
Mark Todd estimates that this costs customers between £200 to £300, as they are moved to a more expensive tariff. Of course, they can shop around and find a new supplier if they want to find a cheaper tariff.
A spokesperson from Ofgem said: “As in any market, suppliers may, of course, fail.
“We have extremely robust procedures in place to make sure energy supplies are always secure and customers' credit balances protected.”
A spokesperson from Energy UK, which represents UK energy firms, said: "The increase in competition and the number of suppliers in recent years has been great for customers in providing more choice and driving down prices.
"However it remains a challenging environment for suppliers of all sizes and we have seen a number of suppliers exit the market in recent years because of unsustainable business models and often poor performance with their customer service.
"Customers should remain confident in the market and the potential savings available on switching tariff or energy supplier."
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