Martin Lewis warns up to 30 energy suppliers could go bust
Martin Lewis has warned up to 30 UK energy firms could go bust unless the wholesale price of gas goes down.
Lewis, founder of MoneySavingExpert.com, said the massive rise in the cost of gas – up 70% since August and 250% since January – means customers and companies alike are facing a "catastrophe".
He added even firms with more than a million customers could go down.
Just hours after Lewis's warning, Avro Energy and Green – companies which served more than 800,000 households – became the latest to go out of business.
They followed PFP, MoneyPlus, Utility Point and People’s Energy which all exited the supply market in the past fortnight.
Referring to the government's £140 Warm Home Discount Scheme during an interview on BBC 5 Live on Wednesday, Lewis had said: "The problem you’ve got is it’s funded by energy firms and energy firms at the moment are being told to supply energy through the price cap of the low cost rate.
Watch: Government preparing for long-term energy price hikes
"So it’s going to be quite tough to ask them to pay more than £140 on the warm home discount when we know there are currently around 40 energy suppliers, and unless the wholesale price starts to come down, it is quite possible there will only be 10 left at the end of this – 30 may well go under.
"So when I say we are in an energy bills and supply catastrophe at the moment, I don’t think that is hyperbole."
Lewis went on to say: "Barring the former big oligopolistic suppliers, I think [for] most firms there is a threat and it’s very difficult to know which one’s going to go under.”
He said this is because people only find out this information when a firm knows it’s insolvent and has to announce this.
“We have to remember the wholesale prices right now are so much higher than the price cap that firms are supplying energy below cost, and you need a very, very strong balance sheet to be able to weather that.
“It’s not [just] small firms at risk of going bust. There are many firms with over a million households with customers who are at risk right now. There is a substantial problem.”
This comes after Jonathan Brearley, chief executive of the Ofgem regulator, told the House of Commons business, energy and industrial strategy committee that “well above” hundreds of thousands of customers may be left in limbo as their energy suppliers go bust in coming months. (Follow this link for Ofgem's advice on what to do if your energy supplier goes bust.)
Meanwhile, business secretary Kwasi Kwarteng told the same committee that the government would struggle to waive rules which ban one energy supplier from supplying more than a quarter of UK households.
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But he added that even in the worst-case scenario of only a handful of energy suppliers being left by the end of the year, it is unlikely that the limit will be breached.
He told MPs: “In a scenario where you have 10 companies, it’s difficult to see one having 25%, but I will definitely cross that bridge when I come to it.
"And also the competition rules are the competition rules, so I think it would be very difficult for a government simply to abrogate those."
According to Confused.com, the "big six" energy suppliers – British Gas, EDF, E.ON, SSE, Npower and Scottish Power – currently make up 70% of the market.
Watch: Energy crisis could hit 'large number' of customers – Ofgem
