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November 18, 2021updated 25 Apr 2022 12:35pm

Inflated gas prices push two more UK utilities to bankruptcy

Weeks after the last in a spate of utility bankruptcies, high international gas prices have brought two more companies to ruin.

By Matt Farmer

Two small energy providers in the UK have announced bankruptcy, affecting approximately 35,500 customers. The announcements come weeks after high wholesale gas prices claimed their last corporate victims.

Neon Reef and Social Energy Supply severed 30,000 and 5,500 customers respectively. UK energy regulator Ofgem has advised customers to take meter readings and wait for their new supplier to contact them.

In October, the collapse of Igloo Energy, Symbio Energy, and Enstroga caused Ofgem to switch 230,000 customers to a “supplier of last resort”. These three bankruptcies followed a chain of similar announcements from smaller utilities throughout September. However, they marked the last bankruptcy announcement until this week.

These bankruptcies came as a result of rising global gas prices. In the UK, the wholesale prices of gas has risen faster than the maximum permitted consumer tariff. Wholesale spot prices currently remain above the maximum allowed consumer tariff. A scheduled rise to the tariff cap from 1 October lessened the losses per customer, but utilities still face financial hardships.

Ofgem’s next scheduled adjustment to its tariff cap comes in March but, alongside the UK Government, it has faced pressure to take action before then.

Ofgem retail director Neil Lawrence said: “I want to reassure affected customers that they do not need to worry: under our safety net we’ll make sure your energy supplies continue. Ofgem will choose a new supplier for you and while we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime. You can rely on your energy supply as normal.”

Also this week, the UK’s Office for National Statistics announced that inflation had risen to 4.2% in October. This marked a significant increase over figures for the previous month, with many blaming rising gas prices for the change. At the same time, the rise remains largely in line with inflation in the rest of Europe, and behind the 6% rise seen in the US.

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