UK households pick up £80m bill left over from failed energy firms
In rural communities where energy is proportionately more expensive this is a depressing story, it tells us:
British households face an £80m bill to cover the costs of transferring more than half a million customers from bust energy firms, raising questions over whether the regulatory regime is fit for purpose.
Eight suppliers have ceased trading this year amid rising wholesale prices, forcing energy regulator Ofgem to step in and appoint new suppliers. Four have collapsed in the past two months alone, including One Select on Monday.
Each of the UK’s 28m homes could have an average of £1.75 added to their energy bills to compensate the new suppliers, according to a Guardian analysis.
Ovo, ScottishPower and other suppliers who have taken on customers of failed firms can recoup some costs through a mechanism known as “Supplier of Last Resort”, ultimately paid for by all consumers via their bills.
Those claims will take months to settle, but there are historical figures that provide a guide to the bill awaiting consumers.
Co-Operative Energy successfully claimed £14m for taking on the 160,000 customers of GB Energy when it went bust in 2016, implying the cost for rehoming 551,500 residential customers in 2018 would be £48.2m.
Industry experts said the number was credible, and could be higher still depending on the credit balances held by the collapsed firms. An initial application for compensation by one supplier this year would indicate a bill more like £76m.
Even taking the more conservative figure, the amount all households are liable for looks likely to be about £80m, or nearly £3 for each annual energy bill, once renewable energy subsidies left unpaid by failed firms are counted.