Families face footing £820m bill over gas crisis

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Families face paying billions to rescue the customers of collapsed energy companies, according to new research. 

Investec found the current bill for the seven firms that have already gone bust stands at £820million, but this could rocket if more companies follow them as expected this winter. 

Energy companies that take on customers from failed rivals are able to reclaim costs, including that of buying more expensive gas and electricity from the wholesale markets to cover the new households. 

This is paid from an industry levy that goes on all customers’ bills. As it stands, each household will pay £30 each to rescue customers of firms that have already collapsed.    

© Provided by Daily Mail

Analyst Martin Young calculated that the difference between what suppliers can charge new customers under the UK’s energy price cap and the cost of purchasing energy at today’s inflated prices was ‘at least £550’ per customer, the FT reported.  

When this is multiplied by the 1.5million orphaned customers it comes to £826million. 

But last week Scottish Power chief executive Keith Anderson warned customers could foot a bill running to ‘billions of pounds’ due to the chaos. 

Octopus was recently appointed by Ofgem to take on Avro Energy’s clients after a ‘competitive process’.

Avro, which had 580,000 customers, was the largest of several companies to go bust this month after the wholesale price of gas soared. 

Under the ‘supplier of last resort’ system, outstanding credit balances owed to existing and former Avro customers will be paid and householders transferred to Octopus will be protected by the energy price cap. 

But customers who were on cheaper fixed price deals, signed before the gas price rise, could see bills jump by hundreds of pounds. The annual price cap is set to rise to £1,277 from October for a typical household.

© Provided by Daily Mail (

Customers are able to change supplier or tariff without exit fees after the switch-over but may struggle to find equivalent deals.

The Government has shied away from offering energy firms a bailout despite concerns few are strong enough to take on transferred customers. 

It comes after a move to less reliable wind and solar power left Britain at the mercy of international gas markets and re-ignited the debate over energy security.

On the weekend it emerged ministers are considering a ‘change of focus’ to nuclear as a more reliable green energy source. 

The Government has been criticised for not replacing ageing reactors sooner, with the UK to lose more than a fifth of nuclear power generation when two plants are retired next year.   

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