Three More UK Power Companies Bankrupt... Total Bankruptcies Rise to 18 Since August

Yearly Trends of UK Natural Gas Prices [Image Source= Bloomberg]

[Asia Economy Reporter Park Byung-hee] Bloomberg reported on the 2nd (local time) that three additional UK electricity suppliers have gone bankrupt.

As a result, the number of electricity suppliers that have gone bankrupt due to the surge in electricity production costs caused by the sharp rise in natural gas prices has increased to 18 since early August. As bankruptcies of electricity suppliers continue, the number of households switching electricity providers has also increased to over 2 million.

The UK privatized the retail sectors of electricity and gas in 1999. To prevent private companies from excessively raising gas and electricity fees, the energy independent regulatory agency, the Office of Gas and Electricity Markets (Ofgem), sets and announces price caps twice a year. If electricity production costs surge, electricity and gas fees cannot be raised, which can lead to electricity suppliers going bankrupt. In fact, since last summer, natural gas prices have soared, causing electricity suppliers to go bankrupt one after another.

Currently, the price of natural gas in the UK is three times higher than at this time of year in previous years. As of the 2nd, the UK’s natural gas price was 172.5 pence per therm (a unit of heat). The average price around this time from 2016 to 2020 was 51.4 pence per therm.

The electricity suppliers that went bankrupt on this day were Omni Energy, Ampower, and Zebra Power, all of which supplied electricity to 21,400 households. The day before, on the 1st, Bluegreen Energy, which supplied electricity to 5,900 households, also went bankrupt.

The Office of Gas and Electricity Markets explained, "The unprecedented surge in natural gas prices is putting financial pressure on electricity suppliers."

UK consulting firm Cornwall Insight predicted that Ofgem will significantly raise the gas and electricity price caps by 30% in February next year, to be applied from April.

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