People’s Energy exits the Energy Supply Market, 350,000 customers impacted
People’s Energy has exited the market on Tuesday with its 350,000 customers being impacted by the closure.
What happened?
A perfect storm of record high energy prices, the energy price cap and Covid-19 has claimed another victim, this time in the form of People’s Energy.
Energy industry experts have been warning for some time that the industry will see a number of suppliers collapse as market pressures continue to build.
Ofgem’s price cap has meant that suppliers have been struggling to cover the costs of supplying energy and has resulted in virtually every supplier undercharging. This shortfall has hit company finances hard and even with the price cap set to rise to a record high in October, suppliers will be struggling to make ends meet.
If the coming winter is a bad one, then wholesale prices could get even higher and put even more pressure on an already battered and bruised industry.
The cause for the high wholesale prices has been the difficulty in restoring stocks of gas following the cold end to last winter and was exacerbated by long periods of low wind over the summer months and in recent weeks.
In an announcement, People’s Energy said: “We are saddened to inform you that People’s Energy is ceasing to trade.
“Please rest assured that your energy supply is secure and all domestic members’ account credit balances are protected. This includes any recent top-ups that were made as part of the seasonal weighting initiative.”
People’s Energy supplied 350,000 domestic customers and 1,000 non-domestic customers.
What happens next?
In the event of an energy supplier exiting the market, Ofgem will take over the process and assign a gas or electricity supply licensee to take over responsibility for the business’ customers. This occurs once Ofgem revokes the supplier’s licence.
People’s Energy’s 225,000 customers will now be put into the Supplier of Last Resort (SoLR) process.
When it comes to choosing a SoLR the authority will assess to see which bidding licensee has the capacity to support the additional customers without jeopardising the supply to its current customers. It must also be able to fulfil its other supplier obligations. If no suitable supplier wants to be a SoLR, Ofgem can use its powers to appoint a supplier without its consent.
People’s Energy is the sixth supplier forced to exit the market in 2021 along with PfP Energy, MoneyPlus Energy, Green Network Energy, Simplicity Energy and Hub Energy.
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Further Reading
Why SaaS is more important than ever for Energy Suppliers
British Gas to take on the customers of failed energy suppliers PfP Energy and MoneyPlus Energy
Ofgem to provide $450 million in funding to energy companies helping their customers go green
Dyball Associates are proud to help new supply businesses successfully launch in the UK market.
Through our energy market consultancy services, and the software we’ve developed, we’re supporting new UK electricity and gas suppliers to get set up and start supplying.
For more information on how to start and manage an energy company, get in touch with Dyball Associates today.
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