Simplicity and Green Network Energy, two small energy suppliers with around 400,000 customers, have ceased trading. The providers, who mainly supply energy to the domestic market, are the first two energy suppliers to fail this year, after a number of similar businesses collapsed in 2020.
The regulator Ofgem has announced that EDF and British Gas will take over the supplies via the Supplier of Last Resort process, meaning that continuity of supply is assured and consumers will be given the option to switch if they wish.
COVID-19 has presented many financial challenges to suppliers, as market falls last year and the accompanied demand destruction meant that many retailers were forced to sell back wholesale energy at a significant loss. Meanwhile, increases in bad debt and volatility in non-energy costs have also been the cause of further struggles.
Ofgem has for many years sought to encourage market access and competition in energy retail markets. However, Uswitch.com’s energy expert, Sarah Bloomfield, believes it will be a difficult year for many of these ‘challenger brands’. She said: “They’ve been hit hard by the knock-on effects from the pandemic and many operate on thin profit margins.”
Ofgem has also announced that they are proposing to fine Symbio Energy up to £100,000 for a number of late payment offences last year.
Although, this week’s news is unlikely to impact Carbonxgen’s clients directly, it does point to the dangers that are present in energy markets at the moment and the need for appropriate due diligence when choosing an energy supplier.
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