Nearly 1.5 million customers of collapsed energy companies could have to pay hundreds of pounds MORE

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Customers of collapsed energy companies that were forced to switch to new suppliers now face higher prices, he revealed.

Several companies have gone bankrupt amid soaring gas prices, with fears others could follow in the winter.

Businesses have left around 1.5 million customers without power, forcing other businesses to step in and take care of them.

However, these companies, including British Gas, E.on and EDF Energy, charge customers significantly more money over a year.

Under the “supplier of last resort” system, unpaid credit balances owed to existing and former customers will be paid and transferred households will be protected by the energy price cap.

But customers who benefited from cheaper fixed-price offers signed before gas prices rose were warned that bills could climb hundreds of pounds.

And now, with the annual price cap set to rise to £ 1,277 from October for a typical household, British Gas and EDF Energy are among the providers expected to charge customers the highest rate.

For example, 580,000 Avro Energy customers will see their bills drop from £ 870 to £ 1,267 with new supplier Octopus Energy.

And 360,000 customers on Green Network Energy will see annual tariffs increase from £ 976 to £ 1,277 with EDF Energy.

Businesses have left around 1.5 million customers without power, forcing other businesses to step in and take care of them.

Businesses have left around 1.5 million customers without power, forcing other businesses to step in and take care of them.

Avro was the largest of several companies to go bankrupt this month after the wholesale gas price spike.

Customers can switch providers or tariffs with no exit charges after the switchover, but may struggle to find equivalent offers.

The government has been reluctant to offer a bailout to energy companies despite concerns that few of them are strong enough to accept transferred customers.

It comes after a shift towards less reliable wind and solar power left Britain at the mercy of international gas markets and reignited the debate over energy security.

How are suppliers of last resort determined?

When an energy supplier goes bankrupt, its customers are transferred to another company, called a supplier of last resort.

Under the “supplier of last resort” system, unpaid credit balances owed to existing and former customers will be paid and transferred households will be protected by the energy price cap.

SOLRs are determined through a competitive bidding process, where Ofgem selects the most suitable supplier to accommodate customers of a collapsed business.

Several factors are taken into account when appointing a SOLR.

They include the timing and size of the supplier, which means larger suppliers may have to step in if a collapsed business has a lot of customers.

Supplier systems are also taken into account, with those similar to the one that collapsed having an advantage.

Customer time is another factor, for example suppliers with business customers may be more able to accept similar customers.

Finally, and it depends more on the fallen supplier, Ofgem will need up-to-date customer information. More information means it will be easier to determine which provider is taking over.

Last weekend it emerged ministers were considering a “shift in focus” to nuclear as a more reliable source of green energy.

The government has come under fire for not replacing aging reactors sooner, with the UK losing more than a fifth of its nuclear power output when two plants are pulled out next year.

The news of the price hike comes after new research found families risk paying billions to save customers from collapsed energy companies.

Investec has found that the current bill for the seven companies that have already gone bankrupt stands at £ 820million, but that could skyrocket if more companies follow them as planned this winter.

Energy companies that buy customers from bankrupt competitors are able to recoup costs, including the cost of buying more expensive gas and electricity in wholesale markets to cover new households.

This is paid from an industry levy that goes on all customers’ invoices. As it stands, each household will pay £ 30 each to save customers from businesses that have already collapsed.

Analyst Martin Young calculated that the difference between what suppliers can charge new customers under the UK energy price cap and the cost of purchasing energy at today’s inflated prices hui was “at least £ 550” per customer, the FT reported.

When that is multiplied by the 1.5 million orphaned customers, that makes £ 826 million.

But last week Scottish Power chief executive Keith Anderson warned customers could pay a bill of up to “billions of pounds” due to the chaos.

Wholesale gas prices have risen 250% since the start of the year and 70% since August, meaning these unprotected companies are buying energy for less than they are selling it to customers.

Nine companies have now gone out of business this year, with the head of regulator Ofgem warning more should follow, leaving hundreds of thousands of customers “way above” in limbo.

Jonathan Brearley declined to give an estimate in front of MPs on the trade, energy and industrial strategy select committee, but said: “We expect a large number of customers to be affected, we have already seen hundreds of customers. thousands of customers affected, it may well be way above that. ”He warned the crisis may not be temporary.

However, Business Secretary Kwasi Kwarteng dismissed claims that there might only be 10 energy companies left by the end of the year as he repeated his vow that “the lights will not go out”.

He told MPs: “I don’t see how they came up with that number. I would be very surprised if we came up with that number… it’s not something I anticipate. ‘

But ministers admitted some families will have a choice between ‘eating and heating’ this winter and dismissed calls from struggling UK energy providers to remove the energy cap that protects millions of the poorest households.


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