Orbit and Entice energy providers collapse with 70,000 customers affected
By SEAMLESS DAILY
26 November 2021
Entice Energy and Orbit Energy, which have about 5,400 and 65,000 customers respectively, ceased trading on Wednesday.
Orbit said energy supplies to its customers were "secure" and said any credit balances would be honoured.
Like the other 22 energy suppliers that have collapsed since August, Bulb has been squeezed between rising wholesale gas prices and the cap set by Ofgem – the energy regulator – on the amount it can charge consumers.
Bulb is the seventh-largest energy firm in the country, with 1.7million users.
Bulb will be the first company to use the Special Administration Scheme- a contigency system that was designed to temporarily support energy suppliers deemed too big to fail.
The regulator has previously advised people to take a meter reading and to wait until a new supplier has been appointed before looking to switch to another energy firm.
You won't be charged exit fees for switching away from your new energy provider.
as a result of a cap limiting what companies can charge their customers, some businesses have been forced to sell energy for less than they bought it for, due to rising wholesale gas prices.
The collapse of Orbit and Entice comes after Bulb, the UK's seventh largest energy supplier, was handed about £1,000 per customer from the UK government to enable it to continue supplying energy.
"As suppliers continue to fall like dominoes, it's clear the market is not functioning as it should and there are serious questions for Ofgem to answer about how this has been allowed to happen," said Gillian Cooper, head of energy policy at Citizens Advice.
However, smaller firms are less able to do and have come under pressure.
Ofgem has said that consumers will also be protected by the energy price cap, which limits how much firms can charge per unit of gas, once switched to a new tariff.
The company was placed into administration yesterday and the government has pledged to set aside £1.7billion to keep Bulb's 1.6million customers warm over winter.
This in turn, means the price will be passed on to households through their energy bills.
Industry regulator Ofgem would normally appoint a rival energy firm to take on Bulb's 1.7million customers under a regime known as the Supplier of Last Resort.
The immediate causes of soaring wholesale gas prices are well known.
Bills are already expected to shoot up by hundreds of pounds next year.
However transferring all of Bulb's 1.7 million customers to a different supplier could risk putting the new supplier at risk of collapse because of the high costs it would face.
'For a supplier to take on the customers of one of the six largest supply companies may mean doubling the size of their customer base.
But Bulb's directors and investors have their own case to face.
Founded in 2015, the startup posed as less of an energy company and more of a tech firm – the Deliveroo or Uber of the fuel market that would challenge the old logic of the sector.
Instead, it took on households and business customers at below cost and sported groovy advertising.
If a taxi app collapses, it ultimately does not matter as much as the failure of a supplier of finance or fuel.
In the short term, one obvious solution is for the watchdog Ofgem to pay far more attention to the financial viability of businesses in its sector.
News earlier this week that Bulb Energy is to go into special administration is the latest episode in a period of unprecedented financial strain in the UK's energy sector.
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