Suppliers must pass renewable subsidies to Ofgem in August
Thousands of homes could lose their energy supplier in the coming months as a result of a financial shock looming over the industry’s smaller companies.
Suppliers are due to pass on millions of pounds’ worth of renewable energy subsidies, collected via energy bills, to the energy regulator, Ofgem, by the end of the month.
This deadline has in the past proved fatal for financially unstable energy suppliers, and it is feared that a string of collapses may follow in the coming months. Suppliers have until 31 August to pay their share of the renewable energy subsidies, or can opt to pay the amount owed – plus interest – by 31 October.
In the past week, Solarplicity has gone bust, leaving 7,500 homes without a supplier. URE Energy was stripped of its supplier licence for failing to pass on its renewable energy funds from last year’s deadline. In total, 14 suppliers have crashed out of the market since the start of last year, and some predict the same number will fail in the years ahead.
A spokeswoman for Ofgem said that given the “huge growth in the number of suppliers” it expects there to be a “period of consolidation” as some exit the market or merge. The energy market has grown rapidly, from 12 suppliers in 2010 to 70 last year, thanks to policies designed to encourage startups into the market as possible.
“Given the large number of suppliers, it’s also more likely that one may collapse – but Ofgem’s safety net will ensure that their customers are already protected,” she added.