Two more UK energy firms have ceased trading amid soaring wholesale energy prices.
Pure Planet, which is backed by oil giant BP, and Colorado Energy join a slew of other small energy companies that have recently gone bankrupt.
Pure Planet claimed it was caught between rising costs and the UK’s energy price cap, which limits how much companies can charge customers.
It claimed that as a result, its business was “unsustainable.”
Both companies’ customers will be redirected to new suppliers.
Pure Planet and Colorado Energy are the latest victims of a global gas price increase.
Pure Planet serves approximately 235,000 domestic customers with gas and electricity, while Colorado Energy serves approximately 15,000 domestic customers with gas and electricity.
Ofgem, the energy regulator, will now find a new supplier for those customers, who are advised to do nothing until the transfer occurs in the coming weeks.
With today’s developments, the number of customers affected by the current wave of energy company failures in the UK has risen to around two million.
Ofgem said on Wednesday that the unprecedented increase in global gas prices in recent weeks was putting financial pressure on suppliers.
“Ofgem’s top priority is to protect customers,” said Neil Lawrence, Ofgem’s director of retail.
“We understand that this is a stressful time for many people, and hearing that a supplier is going out of business can be upsetting.”
“I want to reassure affected customers that they do not need to be concerned: under our safety net, we will ensure that your energy supplies are maintained.”
Mr Lawrence went on to say that if customers have credit, the funds are protected, so they will not lose the money owed to them.
Energy supply business ‘unsustainable’
Pure Planet said that the government and Ofgem expect it “to sell energy at a price much less than it currently costs to buy”.
“This is unsustainable, and therefore, sadly we have had to make the difficult decision to cease trading,” it said.
“In our case, despite being hedged until next spring and having BP’s backing, Pure Planet faced increasing risks and large potential losses by continuing to operate in this market,” Pure Planet said separately.
“Unfortunately, this resulted in BP withdrawing its support, and we are no longer able to continue.”
BP stated that it had worked to assist Pure Planet and had provided financial assistance through wholesale supply and other funding arrangements.
“However, despite extensive work over a long period, we concluded that it is no longer commercially viable for BP to continue this relationship and made this difficult decision,” a BP spokesperson said.
Despite the fact that nine suppliers went bankrupt in September, business and energy minister Kwasi Kwarteng has ruled out assisting struggling energy firms. He predicted that more businesses would fail last week.
The price cap implemented by the regulator, which covers 15 million households in England, Wales, and Scotland, protects customers on default tariffs by limiting charges such as how much customers pay per unit of energy.
However, providers claim that because of the cap, they are unable to pass on rising costs to customers.
Avro Energy, People’s Energy, and Green Supplier Limited are just a few of the suppliers that have recently gone bankrupt.
Rising prices have sent shockwaves through the supply chain.
On Wednesday evening, BBC Newsnight reported that gas shipping firm CNG had informed its energy supplier customers that it would no longer supply the wholesale market.
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CNG supplies roughly 46,000 small businesses, including 10-15 small domestic energy suppliers, through their wholesale business.
Newsnight economics editor Ben Chu tweeted that CNG had recently had to supply gas to households without being paid by suppliers that have failed, including Utility Point and Avro Energy.
This has caused a significant amount of financial damage to CNG, Mr Chu said.
CNG leaving the market will put further pressure on small UK energy firms and could speed up their collapse, he added.