Small supplier GB Energy Supply has ceased trading. Ofgem has appointed Co-Operative Energy to take on GB Energy’s customers after a competitive process.
Subscribers: login to read our interview with Co-operative Energy chief Ramsay Dunning and Robin Hood Energy’s Jo Gilbert
A message on its website says: “Due to swift and significant increases in energy prices over recent months and, as a small supplier, our inability to forward buy energy to allow us to access the best possible wholesale prices, the position of the business has become untenable.”
GB Energy had 160,075 customers, offering cut-price deals, but it announced a 29% price rise on 12 October.
Customers will not see an interruption in supply. They will be transferred to other suppliers under a process overseen by regulator Ofgem. The customers will be placed on a ‘deemed’ tariff from their new supplier, which the regulator said was likely to be higher than their tariff at GB Energy. It explained: “‘deemed’ contracts are usually more expensive. The supplier takes on more risk, as customers are moved to a new supplier quickly without the usual background credit checks. So, they also charge more, to make up for this extra risk.”
Customers will be able to switch to a new tariff or new supplier without penalty. Ofgem added: “Our advice is not to switch immediately, but wait until your new supplier has got in touch with you. They will be able to tell you what to do about any credit balances you might have had with your old supplier.” It also advised customers to take meter readings and directed them to its ‘Be an energy shopper‘ website to find new deals.
The company website also asked customers not to ring the call centre, promising they would be contacted shortly.
Doug Stewart, chief executive of another small supplier, Green Energy UK, said:
“The closure of GB Energy is as a result of loss making tariffs coming home to roost. You can’t make losses without having cash to cover them and when that cash is coming from upfront payments made by customers, the whole pack of cards comes tumbling down when growth slows or stops. There’s nothing left in the bank to pay the creditors, and the customers’ money is all gone.
“Whilst Ofgem, politicians and personal finance ‘experts’ have encouraged people to shop around for the cheapest tariff, the collapse of a small ‘cheapest tariff’ supplier shouldn’t come as a surprise – it’s been predicted by the few for some time. The cheapest deal just isn’t sustainable and the failure of GB Energy proves the point; I fear it is the first of many if we have a harsh winter.
“What it has also done is put all other electricity consumers in line for is a potential bill increase as the industry fund may need to recompense those customers who have lost their deposits. Ofgem consulted on just such an eventuality in June”.
Citizens Advice director of energy Victoria MacGregor said: “Although GB Energy Supply has gone out of business, customers don’t need to worry. This shouldn’t affect their gas and electricity supply so they’ll still be able to heat and light their home as normal.
“The energy regulator Ofgem is finding a new supplier for GB Energy Supply customers. The new supplier will contact customers in due course. Customers will need to take a reading of their gas and electricity meters for their new supplier.
“We’re working closely with Ofgem to make sure people can get the help they need.”