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BP-backed Pure Planet and Colorado Energy, a specialist energy provider that targeted renters, have become the latest of a dozen UK suppliers to go bust since the start of August because of record wholesale gas prices.
Pure Planet, which was 24 per cent owned by BP, supplied gas and electricity to around 235,000 customers, while Colorado Energy had an estimated 15,000 customers.
Pure Planet blamed record wholesale prices and the UK’s energy price cap for its collapse.
“The government and Ofgem, our regulator, expects Pure Planet to sell energy at a price much less than it currently costs to buy,” it said in a statement on Wednesday.
BP, which had provided Pure Planet with its gas and power, said it had recently decided to terminate this arrangement.
“Despite considerable work over an extended period, we concluded it is no longer commercially viable for BP to continue this relationship and took this difficult decision,” it said.
But rival suppliers and energy commentators questioned why Pure Planet had been hit so badly by the recent market spikes when it had claimed in a blog addressing the market volatility at the end of last month: “We feel we’re well hedged for the winter, which means we have the energy we expect our members will need until spring covered.”
Colorado Energy announced earlier in the day that it was entering Ofgem’s “supplier of last resort process”. This ensures customers continue to receive electricity and gas and appoints an alternative provider.
In statement, Ofgem said that because of this “safety net”, energy would be continue to be supplied to Pure Planet and Colorado Energy customers and that any credit balances they had on their accounts would be protected.
Colorado Energy’s collapse had been expected after Ofgem named it among five companies that had failed to meet financial commitments to pay into a scheme that supports small renewable energy projects.
Others among the five, including Igloo and Symbio Energy, went bust at the end of last month. Colorado had failed to pay £261,406 into the feed-in tariff renewables scheme by a September 17 deadline.
Further failures are expected: wholesale gas and electricity prices remain stubbornly high, making it difficult for companies that did not have sufficient hedging to buy the energy they had committed to providing.
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All of the customers of companies that have failed since the start of August have been reallocated via the supplier of last resort scheme, although the regulator also has the option of appointing a “special administrator” to temporarily run a business if a large supplier goes bust or the supplier of last resort scheme becomes overwhelmed.
Larger groups including market leader Centrica have recently warned that it is becoming increasingly difficult for them to continue to bear the costs of taking on orphaned customers given the disparity between the costs of buying energy at current wholesale prices and the £1,277 a year maximum they are allowed to charge under Britain’s energy price cap. Although these costs can be recovered via a levy that ends up on consumer energy bills, it can take two years.
Colorado Energy gave no further comment on Wednesday other than to assure customers that their energy supplies would remain secure and any credit balances would be protected.
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