Two more UK energy suppliers stop trading on gas price hit



By Kate Holton

LONDON, Sept 22 (Reuters) - Two more British energy suppliers stopped trading on Wednesday, leaving more than 800,000 customers potentially facing higher bills, after a jump in natural gas prices pushed the sector to the brink.

Avro Energy and Green Supplier Limited became the latest providers to say they would cease trading, following a handful of others that have exited the market this year. Between them, Avro and Green held 2.9% of the market's domestic customers.

The country's energy regulator Ofgem and business minister Kwasi Kwarteng earlier warned parliament that the soaring gas prices would force more suppliers out of business and that the industry should prepare for a tougher environment.

The regulator will now select alternative providers to take on the customers and an industry price cap should limit the extent of any rise in monthly bills.

"In recent weeks there has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers," Ofgem said. It added that it was working with the government and the industry to protect customers this winter.

Natural gas prices have spiked as economies reopened from COVID-19 lockdowns and as high demand for liquefied natural gas in Asia pushed down supplies to Europe, sending shockwaves through industries reliant on natural gas.

Already meat producers Link have suffered as high energy prices forced a fertiliser producer to halt production, denying the food industry the carbon dioxide by-product that is used to stun animals for slaughter and pack food.

In the energy market, small providers that had launched in recent years have been hit by the jump in costs. From more than 70 suppliers in 2018, there are just over 30 now.

Kwarteng told a parliamentary select committee that the industry had to prepare for longer-term high prices. Analysts have said that they expect them to remain high until next year.

Kwarteng said Britain has robust systems to cope with company failures, and small firms which had recently entered the market should not expect new state handouts.

"I think they should look to their own resources, and look at their own business models.

"It cannot be right for companies that have entered the market recently, and now essentially in difficult times, stretching out a hand for taxpayers' money," he said.

Jonathan Brearley, the head of Ofgem, told parliament that the rise in prices was unprecedented.

"It really is something that we don't think we've seen before at this pace," he said.
Reporting by Kate Holton, Paul Sandle and William James; Editing by Alison Williams, Elizabeth Piper and Mark Porter

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.