Sunday , October 20 2019
Home / unitedkingdom / Small energy companies risk bankruptcy as a result of financial shock | Business

Small energy companies risk bankruptcy as a result of financial shock | Business

Thousands of homes may lose their energy supplier in the coming months as a result of the financial shock hanging over small industry companies.

Suppliers must transfer millions of pounds of renewable energy subsidies collected through electricity bills to Ofgem, the energy regulator, by the end of the month.

This past deadline has proved fatal for financially unstable energy suppliers, and there are concerns that a series of collapses may follow in the coming months. Suppliers must pay their share of subsidies for the use of renewable energy sources by August 31, or can pay the amount due plus interest by October 31.

Solarplicity went bankrupt last week, leaving 7,500 homes without a provider. URE Energy was stripped of its supplier license for not being able to transfer its renewable energy funds from last year. In total, since the beginning of last year, 14 suppliers have left the market, and some predict that the same amount will fail in subsequent years.

A spokeswoman for Ofgem said that given the “huge increase in the number of suppliers,” it is expected that there will be a “consolidation period” when some of them exit the market or merge. The energy market has grown rapidly – from 12 suppliers in 2010 to 70 last year thanks to policies aimed at stimulating startups in the market.

“Given the large number of suppliers, it is also more likely that one of them may collapse, but Ofgem’s security network will protect their customers,” she added.

The regulator has appointed EDF Energy to take on Solarplicity customers, but industry sources fear that “bailout” will increase costs for the rest of the industry.

“A number of suppliers expressed Ofgem's concern about how the costs of insolvent companies are effectively transferred to customers of other suppliers,” said one industry source who asked not to be named.

“Last year, more than 30 suppliers did not pay their debts, and this year the market conditions have become even more difficult. Some of those who could not pay have gone bankrupt since then, and logically we expect this number to increase, ”the source added.

According to Ofgem official docs seen observerSolarplicity customers had to repay more than £ 3.5 million in loans when the company crashed. Amounts will be paid by other suppliers in the market, and will ultimately be refunded through electricity bills.

A spokeswoman for the energy ombudsman said: “For some time, we knew that Solarplicity could not fix the situation of customers and former customers, including not paying the necessary fees and refunds for goodwill gestures.

“The behavior of Solarplicity in recent months, culminating in its decline, has caused significant financial difficulties for a significant number of consumers and, ultimately, for our organization,” he said.

Solarplicity collapsed in less than two weeks after it sold about 43,000 customers to competitive novice Toto Energy. The timing of the sale and the high level of outstanding credit balances among the remaining customers caused the industry to suspect that the company was selling off its “valuable” customers and left its debts to repay Ofgem.

A spokesperson for Solarplicity said, “This is just not the case. "Solarplicity has taken extensive legal and legal advice to ensure that this process is carried out properly and the best result for clients and lenders."

Source link