PfP Energy and MoneyPlus Energy cease trading
Two energy suppliers, PfP Energy and MoneyPlus Energy have ceased trading as soaring wholesale energy prices continue to take a heavy toll on the energy supply market.
What happened?
The energy supply market is facing a challenging time with suppliers struggling with surging wholesale energy costs and being constrained by Ofgem’s price cap on energy bills.
The price cap is designed to try and reduce the impact on consumers, but it is making life hard for many energy suppliers as they cannot pass on the increased prices to their customers.
With most smaller challenger suppliers offering cut-price tariffs in an attempt to undercut their larger competitors they have been particularly exposed to higher retail costs.
Several environmental and regulatory payments are also due adding further pressure to energy supplier balance sheets. So far this year five suppliers have been forced to leave the market with PfP Energy and MoneyPlus Energy joining Green Network Energy, Simplicity Energy, Hub Energy.
“It’s an unprecedented market situation I think means we’re going to have an unprecedented response. This is the first time in the price cap era that we’ve had such a huge rising commodity price situation,” said an energy industry insider.
Also read: Hub Energy ceases Trading
The Supplier of Last Resort Process
Between PfP Energy and MoneyPlus Energy, they provided over 94,000 customers with electricity and gas.
Under the SoLR process, the customers of both suppliers will continue to receive energy and any outstanding credit balance for domestic customers will be protected.
“Although the news that a supplier going out of business can be unsettling, PFP Energy and MoneyPlus Energy customers do not need to worry. Under our safety net, we’ll make sure your energy supplies continue.
If you are a domestic customer with credit on your PFP or MoneyPlus account this is protected and you will not lose the money that is owed to you,” said Neil Lawrence, Director of Retail at Ofgem.
Every time a supplier fails it impacts the wider industry as the new supplier must fork out to the customers with owed credit. These costs are then recouped by the wider industry, adding to the upward pressure on costs and energy bills.
Several of the larger and better run energy suppliers have expressed their dislike for the SoLR process, arguing that it is unfair to responsible suppliers and encourages risky behaviour.
Also read: How should Energy Suppliers explain Energy Bill Increases?
Tough Winter ahead
Concerns are growing that this winter could create a perfect storm of challenges for many energy suppliers.
The record-high wholesale energy prices, risks of gas shortages and worries of a harsh long winter could all combine to force more energy suppliers out of the market and consumers freezing in the dark in their own homes.
Ofgem introduced tougher standards and rules last year and has said that it will be ‘closely monitoring suppliers’ performance and will take action whenever they fall short in their efforts to protect consumers and minimise costs that may otherwise be mutualised across the market’.
As a result, the government has extended the Warm Homes Discount scheme and speculation is growing that the energy price cap could be reviewed more regularly during times of high market volatility.
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Further Reading
Soaring gas prices and unreliable wind sees the UK turn to Coal to keep the power on
Energy Rationing Fears grow due to low UK gas reserves and Russian opportunism
UK Energy supply market undergoing a period of consolidation says new report
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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