October 16, 2021

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Energy suppliers Avro Green cease trading leaving 800,000 customers in limbo

Green took blamed ‘unprecedented market conditions and regulatory failings’ for its collapse (PA Archive)

Green took blamed ‘unprecedented market conditions and regulatory failings’ for its collapse (PA Archive)

Energy suppliers Avro and Green have become the latest firm to fall victim to a surge in gas prices which is expected to push dozens of companies out of business this winter.

More than 800,000 customers will be temporarily left in limbo after the companies separately announced on Wednesday that they would exit the energy market and cease trading. Energy regulator Ofgem will manage the process of switching customers to new providers.

Green blamed “unprecedented market conditions and regulatory failings” for its collapse, taking a swipe at the government which it said had “left behind” smaller energy suppliers.

Green has been a vocal critic of the energy price cap, calling on ministers to review the policy which has left suppliers selling power to customers at a loss.

The firm was among 15 small energy suppliers that wrote to Ofgem and government ministers this week, asking for the energy price cap methodology to be reviewed and for an immediate support package to be assembled.

Those calls were rebuffed by Kwasi Kwarteng, the business secretary, who said the government would not bail out badly managed companies.

Green said in a statement: “Green fears that smaller energy suppliers are being left behind by the government, with rescue packages being put in place for larger suppliers and for private discussions to be held with the business secretary.

“There is a position in Government and Ofgem that smaller suppliers should be left to fail, despite the unprecedented increases in wholesale electricity and gas, the cost of failed suppliers being mutualised across the industry, and an outdated price cap methodology forcing smaller suppliers to sell at a loss .”

Green is the fifth supplier to cease trading in recent weeks as wholesale gas prices have jumped to 250 per cent of their January level.

Sharply rising demand as the world has emerged from the pandemic has combined with a host of factors restricting supply.

An unusually cold winter left stocks low and a lack of wind has meant the UK relied more on gas than in previous years. Russia has provided less gas to Europe in a move that many believe is designed to exert its power over EU countries blocking the opening of the long-awaited Nord Stream 2 pipeline.

News of Green’s collapse came shortly after the boss of energy regulator Ofgem warned that more energy suppliers would likely be forced out of business.

“Have a look at the change in the gas price – it really is something that we don’t think we’ve seen before at this pace,” Jonathan Brearley told MPs on the Business, Energy and Industrial Strategy Committee.

He declined to give an estimate on numbers of firms that might go bust but said: “We do expect more [suppliers] not to be able to face the circumstances we’re in.”

He said: “We do expect a large number of customers to be affected, we’ve already seen hundreds of thousands of customers affected, that may well go well above that.

“It’s very hard for me to put a figure on it.”

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