Why are so many UK energy providers going bust?

DailyTimes  |  Nov 29, 2021

Britain’s domestic energy providers suffered a string of bankruptcies in recent months, with Bulb the latest to see the lights go out this week.

The number of UK suppliers has almost halved since August, ravaged by sky-high global wholesale costs — and local factors like the so-called energy cap.

Soaring fuel bills are also translating into surging inflation, which makes it increasingly hard to pass on spiralling costs to consumers as the cold winter approaches.

A total of 25 British suppliers have gone bust since August, plagued by surging wholesale prices for gas and electricity.

The dramatic collapse has left just 28 providers still standing, according to regulator Ofgem. The nation’s seventh-biggest supplier, Bulb, went bust on Monday, triggering special intervention to protect the near 1.7 million households it serves.

The government has set aside nearly £1.7 billion ($2.3 billion, 2.0 billion euros) to ensure Bulb stays on.

Under a separate bankruptcy process, customers from other smaller failing suppliers have been taken on by larger rivals.

Analysts fear consumers will ultimately pay via even higher fuel bills — hurting the poorest households the most.

Europe has also been adversely affected as energy prices have vaulted higher on resurgent post-pandemic demand, the arrival of the colder northern hemisphere winter, and stubborn fears over key Russian supplies.

Some providers have also gone bust or restructured activities in France and Germany. However, Britain is more vulnerable due to its greater reliance on natural gas and insufficient gas storage facilities.

The government is meanwhile seeking to ramp up renewable and nuclear power to help meet its 2050 net zero carbon target.

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