Supplier failures could add £45 to household bills



E

nergy bills might go up by a further £45 for all households in Britain just to cover the cost of suppliers going bust, according to a new estimate.

Experts at energy consultancy BFY Group said suppliers which pick up the pieces from recent failures will be able to claim back close to £1.3 billion in expenses from British households.

On Wednesday, two further suppliers, with around 250,000 customers between them, went out of business.

Since the start of September around two million households have seen their energy supplier collapse.

Industry regulator Ofgem has already appointed new suppliers for most of those households, but being a so-called Supplier of Last Resort is not cheap.

Companies tasked with supplying these customers have to buy the energy they think households will use in advance – a process known as hedging.

But the same gas price increases that are causing energy suppliers to fail will also make it expensive for the replacement suppliers to pick up the pieces.

(PA Graphics) / PA Graphics

Hedging 12 months in advance is currently roughly twice as expensive as it was a year ago, and to buy gas for the winter months is five times the old price.

Last-resort suppliers can apply to Ofgem to claim back some of the costs they have racked up during the process.

BFY estimates the money that is claimed back could reach around £630 for each of the two million households from suppliers that have failed so far, a total of nearly £1.3 billion.



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