Extra Energy has become the sixth small energy supplier to go out of business in the UK in the last year. It had 108,000 domestic and 21,000 business customers.
The firm blamed the government’s recently introduced energy price cap for ‘making the market unviable’.
We have tried
Chief executive Nick Read said: “We have tried to restructure, merge and reduce costs in order to ensure the viability of our UK business.
“However, in light of the substantial UK regulatory change with the introduction of the price cap, we see no long-term investment opportunity in the UK market.”
Customers have been urged not to panic as the Ofgem safety net scheme will ensure continued supplies and protect any credit arrangements in place.
The regulator will appoint a new supplier and customers will be transferred direct.
Spokesperson Philippa Pickford said: “If you are an Extra Energy customer, under our safety net, we will make sure your energy supplies are secure. Ofgem will now choose a new supplier and ensure you get the best deal possible. Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch.
“You can continue to 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.”
Other suppliers who have ceased trading in 2007 are:
- Future Energy
- National Gas and Power
- Usio Energy
All are small companies established after the government opened up the energy supply market to competition in 2014.
Energy Ombudsman chief executive Matthew Vickers agreed with Ofgem’s advice to customers to sit tight and not switch.
He said: “We are keen to work closely with whichever supplier is chosen to take on Extra Energy’s customers to help ensure a smooth transition for consumers, as we did with Octopus Energy following the collapse of Iresa in July.”
Ofgem is suggesting that new companies wanting to enter the market should be subject to finance tests to ensure they have enough financial resources to meet customers’ expectations.
By Spring 2019 new applicants for supply licences would have to be able to demonstrate that they have enough funds and resources to cover at least the first 12 months.
Spokesperson Mary Starkes said: “Our proposed new tests for suppliers wanting to enter the market will ensure consumers will be better protected against the risk of poor performance, while still allowing more competition and innovation in the energy market to benefit consumers.”
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Ofgem said that as of June this year the UK had 73 energy suppliers and 67 of them were smaller operators who have picked up customers switching from the Big Six – British Gas, SSE, Scottish Energy, E.On, Npower and EDF.