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January 19, 2022updated 03 Feb 2022 3:07pm

As it happens: the 2022 UK energy price crisis

Consistently high wholesale gas prices have driven many utilities to the edge of bankruptcy, while consumers suffer massive bills.

By Matt Farmer

Since September 2021, UK utilities have fought to stay in business, facing historically high wholesale gas and power prices. By the end of December, these had caused at least 25 utility bankruptcies, with more expected in 2022.

The most recent stories in 2022:

The year started with Bulb Energy in “special administration”, supported by public money while administrators restructure the company. The company’s collapse in November 2021 left 1.7 million customers without a supplier, at a cost of £1.7bn.

When consumer tariff price caps rose in October, pressure shifted from businesses to customers. Many consumers now struggle to afford energy prices, and expect the next price rise to mean serious sacrifices. The consumer price cap will rise again in April, and consumer groups and citizens have urged the government to make energy bills more affordable before then. Suggestions entering parliament include removing taxes from bills or shifting them onto other taxes, as well as making energy bills disproportionately larger for heavy users.

At the same time, regulator Ofgem has started consultations examining how to best reform the energy market. The body has suggested greater scrutiny of directors and “stress tests” for companies as ways to prevent further bankruptcies and ensure affordable bills for customers.

You can see our coverage of these events throughout 2022 below.

3 February – Ofgem raises tariff cap; government steps in

As scheduled, Ofgem announced its next tariff cap on 3 February. This pushed energy tariffs higher than ever before, with a 50% increase for consumers on default tariffs. With the cost of living already pushing consumers into poverty and causing some to choose between heating and eating, the UK Government also stepped in to offer financial support, offsetting some of the rising cost.

26 January – Fixing the UK’s broken energy market

As Ofgem undergoes consultations on how it could prevent strings of utility bankruptcies in future, politicians have proposed different plans to reform energy bills in the short term. Much of the conversation has focused on how to best fund the energy transition, and whether energy bills should directly pay for upgrades to the UK’s energy system.

19 January – Together Energy goes bust

Together Energy became the first bankruptcy of 2022, leaving 176,000 customers uncertain of their future supplier. The bankruptcy also pulled down subsidiary Bristol Energy and Warrington Borough Council, which had invested heavily in the company. This also brought the total number of utility bankruptcies in the UK since September 2021 up to 26.

13 January – Ovo Energy cuts one-quarter of staff

The UK’s third-largest utility, Ovo Energy, made 1,700 staff redundant in mid-January. The company cut more than one quarter of its staff to minimise costs as wholesale energy prices continued to depress earnings.

Founder and chief executive Stephen Fitzpatrick has repeatedly urged the government to intervene in the energy crisis to protect companies and consumers. At the same time, unions have criticised Fitzpatrick’s job cuts.

11 January – Report finds Bulb Energy’s hedging insufficient

A report into the bankruptcy of Bulb Energy concluded that the company went bust because its hedging system did not provide sufficient insulation against long-term price rises. The report also suggested that administrators have claimed a large tax refund, although the government has disputed this.

Read all the events of 2021 here.

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