Yorkshire Energy latest energy supplier to cease trading as Covid-19 pressures mount

What happened?

The energy supplier that had 74,000 customers notified Ofgem of its exit from the increasingly competitive energy market after attempts at securing new financial backing fell through.

Yorkshire Energy launched two and a half years ago and was one of dozens of new energy suppliers entering the market to challenge the larger companies who were accused of poor customer service and unfair pricing.

Competition in the energy supply market is increasingly fierce with recent data showing that more consumers are switching away from the larger suppliers to smaller ones offering better tariffs.

 “After two and a half years in operation, we sadly have begun proceedings to cease trading. We have operated since day one with the simple values of transparency and honesty, paying our renewable obligations on time and having customer service that we are proud of.
 
"Ofgem, the energy regulator, is appointing a new supplier for our customers, which will be announced on Saturday 5 December. We would like to offer our heartfelt thanks to our customers and colleagues for their loyal support over the years," said Annie Faulder, chief executive of Yorkshire Energy.

Also read: Number of Energy Supply switches to Challenger Suppliers hit highest ever level

SoLR process to be activated

The energy regulator will now seek out a new supplier for Yorkshire Energy’s 74,000 customers under the SoLR process.

Under its safety net, a failed energy suppliers’ customers will continue to be supplied with energy and any outstanding credit balances of domestic customers will be protected.

“Yorkshire Energy customers do not need to worry, as under our safety net we’ll make sure your energy supplies are secure and domestic customers’ credit balances are protected.

“Ofgem will now choose a new supplier for you and whilst we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff,” said Phillipa Pickford from Ofgem.

When it comes to choosing a SoLR, Ofgem 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.

Also read: What is a Supplier of Last Resort?

Covid-19 pressures

Yorkshire Energy faced difficulties as a consequence of the challenges created by the Covid-19 pandemic as it faced a wave of bad debts caused by customers being unable to pay their energy bills.

Experts are concerned that the supplier’s collapse could signal the start of a wave of forced market exits.

A combination of the price cap and the rise in bad debts and wider economic difficulties created by the lockdowns has taken its toll on many businesses.

“'Challenger energy brands such as Yorkshire Energy operate on small margins, and many have been affected by the lockdowns causing customers to delay or miss payments,” said Will Owen, an energy expert from Uswitch.

Also read: Energy Price Forecast 2020 – The Impact of Coronavirus

Several energy suppliers have gone bust this year including Tonik Energy and Breeze Energy

To reduce the risks, contact the experts at Dyball Associates. We can help you with regulatory compliance, managing your services and the smooth running of your energy supply business via our CRM system.

Further Reading

Energy Suppliers join new Vulnerability Commitment

Ofgem and Utilita Energy clash over smart meter rollout warning

End of the 'Big Six' Energy Suppliers as the rise of challengers’ force Ofgem reclassification

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 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.