Small Supplier Spark Energy Ceases Trading

Small energy supplier, Spark Energy, has collapsed, leaving almost 300,000 customers without an energy supplier.

The company announced its closure at the end of November. Announcing it on their website they said, “We will be unable to continue supplying customers due to increasingly tough trading conditions in the energy industry.”

Shortly before the collapse, however, Spark were named by Ofgem as one of two companies under investigation for unpaid Renewable Energy Obligation buyout payments. The company had missed a deadline for a payment of £14.4m.

Chief executive of the 11 year old company, Chris Gauld, claimed that the government had ‘caused chaos in the industry’ by the introduction of the energy bill price cap.

With a chilly winter forecast, there is much speculation that there could be more casualties in the energy industry before the spring rolls around.

Also read: What Is A Supplier Of Last Resort? (SoLR)

Ovo Energy allocated as the new supplier

Ofgem were quick to step in and allocate anew supplier for the customers left in the lurch. Appointing Bristol based Ovo Energy as the new provider was completed within a week from the closure of Spark.

Ex-Spark customers may not notice much of a change, as Ovo have promised to retain the Spark name and branding for this arm of their business. They will also keep the 300 Selkirk based staff of Spark to run these accounts and have promised to keep customers on the same tariffs too.

CEO and founder of Ovo, Stephen Fitzpatrick, said: “The energy sector is going through a major change and many companies, big and small, are struggling to adapt. We are delighted to have been able to bring Spark into the Ovo Energy Group, securing a good outcome for their customers and the team.”

A bad year for energy suppliers

Spark became the seventh energy supplier to go bust over the course of 2018. Among the other failed suppliers are Usio, Extra Energy, Iresa, National Gas and Power, Future Energy and Gen4U. Altogether more than half a million customers have been affected by these issues.

Losing so many firms in such a short space of time is symptomatic with a number of wide ranging issues in the gas and electricity marketplace. While wholesale gas and electricity prices rising are putting the squeeze on energy companies’ profits, Ofgem’s recently introduced price cap means next year will be even tougher for these businesses.

Rising non commodity costs are also having an impact but seem to rarely be reflected in the acquisition tariffs of smaller challenger brands. It seems they are so focussed on remaining near the top of price comparison searches, they have little regard for how their low retail price will affect profitability and cashflow.

Over the past decade, a large number of small suppliers have entered the market, often without a great deal of scrutiny over their standards of service or financial health. As a result of this, Ofgem is  proposing new tests for suppliers wanting to enter the UK marketplace, in a bid to reduce these supplier failures.

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