Avro Energy and Green latest to collapse

23 September 2021, 11:29   By Dr Lucy Brown, Editor

Two more small energy companies have collapsed into administration as energy crisis deepens.

Avro Energy is the biggest supplier to collapse recently with 580,000 customers affected while Green had 255,000 domestic customers at the time of collapse.

Taken together, the suppliers had a 2.9% share of the market and those customers will now be assigned a new energy provider by regulator Ofgem.

It's likely more firms are going to collapse in the coming weeks as rising gas prices squeeze the finances of smaller providers.

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Credit: Andrey_Popov/Shutterstock.com

Latest collapses

Avro Energy and Green are the latest suppliers to fold following an unprecedented crunch in the energy market.

Avro had established themselves as a serious challenger to the big names and were frequently named as one of the cheapest energy suppliers around.

They supplied energy to 580,000 gas and electricity customers, making them the biggest supplier to collapse during this crisis.

Meanwhile, Green had 255,000 domestic customers and a small number of non-domestic customers, giving them a 0.9% market share.

Energy crisis

Avro and Green's collapses bring the total number of failures in recent months up to seven after the collapse of PfP Energy and MoneyPlus Energy at the beginning of September and Utility Point and People's Energy last week. Hub Energy also folded in August.

Altogether, this crisis has seen almost 1.5 million customers lose their energy supplier to administration, amounting to around 5% of all domestic energy customers.

Just as we saw in last week's collapse of Utility Point, the boss of Green was critical of the Government's handling of the crisis, saying he didn't believe the supplier had done anything wrong and that bigger firms were likely to ask for bailouts in the coming weeks.

A spike in wholesale gas prices has been the main driver for these collapses, with smaller firms simply unable to absorb the higher costs when they have customers on fixed, unchangeable deals and other customers protected by the energy price cap.

The statement put out by Utility Point was especially critical of the energy price cap, saying it is set at least £200 lower than needed to sustain the UK energy market.

From 1 October 2021, the price cap is rising and adding around £139 extra to customer bills.

Future of UK energy

There are plenty of opinions and public disagreements about why the energy market is in crisis and what the Government should be doing about it.

After suggesting they may be open to giving loans to larger suppliers to help them absorb the 1.5 million new customers being transferred to them, the Government seems to have rowed back from that idea for the time being.

Yet other energy suppliers are still sounding warning signals with Bulb and Igloo just two who have admitted they are working to refinance during this crisis.

Analysts estimate only 10 energy companies could be left by the end of this crisis, with the big names and a handful of others remaining. Whether this would be good for customers in the long-term is unclear.

It isn't only a question of small companies generally undercutting bigger names on price. While this could be seen to contribute to their collapses, these challenger providers also had fewer overheads and sometimes lower profit margins than their larger rivals.

Challenger energy companies also offer different models of customer service. It's notable that in our analysis of customer service in the energy sector, one firm who have collapsed (Avro) and one who are in trouble (Igloo) were part of the top three for customer service.

The uncertainty around energy suppliers is frustrating for customers, even when their energy supply is protected no matter what happens.

It's undeniable that these collapses will lead to higher bills for customers as we discussed back in 2019 when Our Power folded, but whether the Government will choose to step in to alleviate the problem is still unknown.

How much could you save on your energy bill?

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