Pure Planet, a renewable power agency that was backed by the oil firm BP, and Colorado Power, have grow to be the most recent power suppliers to break down beneath the load of hovering fuel costs.
In an announcement, Pure Planet blamed the UK’s power worth cap for its failure and lashed out on the enterprise secretary, Kwasi Kwarteng, who has mentioned there can be no taxpayer-funded bailouts for struggling power firms.
Pure Planet’s three co-founders wrote that they have been “being compelled to lose cash by means of a mix of sky-rocketing world wholesale power costs clashing with a home staid authorities and regulatory coverage – the worth cap”.
“Merely, the principles prevented us from masking our prices,” they added.
The 2 companies’ collapse means 14 gas and electricity suppliers have failed this year. The founders of Pure Planet echoed widespread predictions that extra power companies would go bust earlier than the top of the yr “except one thing” changesd.
Whereas some power suppliers have confronted criticism for failing to “hedge” in opposition to excessive power prices, lowering the influence of sky-high costs, Pure Planet mentioned it had hedges in place to final till Spring. Nevertheless it mentioned BP has chosen to withdraw help for the corporate owing to the chance of “massive potential losses” by persevering with to function whereas fuel priceswere excessive.
Pure Planet had 235,000 prospects, whereas Colorado Power had 15,000. The shoppers will likely be transferred to new suppliers by the regulator Ofgem beneath the provider of final resort scheme.
Whereas Colorado provided little element on its collapse, Pure Planet co-founders, Andrew Ralston, Chris Alliott and Steven Day, criticised the federal government’s resolution to not help power suppliers.
They mentioned the refusal to offer help was “illogical”, placing its 200 employees in danger and impeding innovation to succeed in web zero.
“Kwasi Kwarteng says the worth cap is non-negotiable. Truthful sufficient,” they mentioned. “However that doesn’t imply serving to provide firms must be non-negotiable too. If he doesn’t act quick, he’ll don’t have any suppliers to be minister of.”
The influence of excessive fuel costs had already claimed 12 power suppliers earlier than Wednesday, together with 10 because the begin of August. The variety of firms within the sector has been extensively predicted to lower from about 70 initially of the yr to fewer than 20 this winter.
The wave of failures has left Ofgem needing to search out new suppliers for greater than 2m buyer accounts beneath its provider of final resort scheme, which is designed to move people to new suppliers seamlessly, with no interruption of provide.
However the sheer quantity of shoppers of failed suppliers has led to hypothesis that Ofgem might be forced to use its special administrator safety net, as but untested, beneath which a specialist agency might be parachuted in to run a failed operator. The Metropolis consultancy Teneo has held discussions with Ofgem about performing the function.
Final week, Ofgem’s chief government, Jonathan Brearley, admitted that the regulator wanted to construct a “more resilient” regulatory system after criticism that too many small and inexperienced suppliers with poor monetary methods had been allowed to enter the market to produce households with fuel and electrical energy.
On Wednesday night, Ofgem’s director of retail, Neil Lawrence, mentioned: “I need to reassure affected prospects that they don’t want to fret: beneath our security web we’ll be certain your power provides proceed. When you have credit score in your account the funds you could have paid in are protected and you’ll not lose the cash that’s owed to you.
“Ofgem will select a brand new provider for you and whereas we’re doing this our recommendation is to attend till we appoint a brand new provider and don’t change within the meantime. You may depend on your power provide as regular. We are going to replace you when we’ve chosen a brand new provider, who will then get in contact about your tariff.”