An industry executive warned today that diseases in the energy sector could end up costing taxpayers billions.
Andrew Lindsay, co-CEO of Telecom Plus, which does business as a utility warehouse, said: “Consumers face running costs running into the billions of pounds to clean up the mess.”
Lindsay’s remarks came a day after Bulb became the largest energy supplier due to skyrocketing gas prices. The bulb collapse means nearly 4 million customers this year have seen their domestic suppliers collapse, with more than half of those suppliers falling.
The bulb has 1.7 million customers and its size has effectively forced the government to nationalize it to ensure continuity of supply while a more permanent solution may be found.
UNISON Secretary General Christina McNea said: “Every time a company goes down, it is energy customers who pick up the tab. The bulb’s fall could mean an additional £150 for each household on next year’s energy bills .
“This is on top of the £150 everyone is already paying for the many other suppliers that have gone to the wall since the summer. These huge increases will affect everyone – and low-income families the most. Difficult.”
Industry insiders want regulator Offgame to change the government’s price cap, which has been responsible for the collapse of many suppliers. The price cap means that rising energy prices have caused each supplier to lose money on all of its customers.
Lindsay said: “We welcome Offgame’s commitment to preventing this situation from happening again.”
The energy crunch has been good for the utility warehouse, which lets customers bundle all their household bills into one statement and claims to save customers money.
The utility warehouse signed on 15,000 new customers in October alone. This was over four times the number of sign ups in the past six months.
The company uses multi-level marketing to promote itself and Lindsay said: “The emerging cost of living crisis is increasing the number of new partners to join us.”
Telecom Plus’ first half revenue rose 6% to £371 million, but after a deal with Offgame for failing to treat struggling energy customers fairly recently, pre-tax profit fell from £1.5 million to £1.5m. 26.2 million.
Shares of Telecom Plus rose 52p to 1348p, valuing the business at over £1 billion.
Elsewhere, Paypoint today agreed to pay £12.5 million to avoid competition scrutiny altogether. Ofgem was in the early stages of investigating whether the exclusivity clauses in Paypoint’s contracts with retailers violate the rules. Paypoint has outlet partnerships with 28,000 retailers across the UK that allow people to top up their electricity meters.
Paypoint has agreed to remove the exclusivity clause in its contracts and will pay £12.5 million towards Ofgem’s voluntary redressal scheme.
Shares of PayPoint rose 9p to 657p.