Colorado Energy, a specialist energy provider that targeted renters, has become the 11th UK supplier to go bust since the start of August because of record wholesale gas prices.
The company, which had an estimated 15,000 customers and worked with letting agents, said on its website on Wednesday that it will be entering regulator Ofgem’s “supplier of last resort process”. This ensures customers continue to receive electricity and gas and appoints them an alternative provider.
Colorado Energy’s collapse had been expected after Ofgem named it among five companies that had failed to meet financial commitments to pay into a scheme that supports small renewable energy projects.
Others among the five, including Igloo and Symbio Energy, went bust at the end of last month. Colorado had failed to pay £261,406 into the feed-in tariff renewables scheme by a September 17 deadline.
Further failures are expected: wholesale gas and electricity prices remain stubbornly high, making it difficult for companies that did not have sufficient hedging to insure them against volatility and strong balance sheets to buy the energy they had committed to providing.
All of the customers of companies that have failed since the start of August have been reallocated via the supplier of last resort scheme, although the regulator also has the option of appointing a “special administrator” to temporarily run a business if a large supplier goes bust or the supplier of last resort scheme becomes overwhelmed.
Larger groups including market leader Centrica have recently warned that it is becoming increasingly difficult for them to continue to bear the costs of taking on orphaned customers given the disparity between the costs of buying energy at current wholesale prices and the £1,277 a year maximum they are allowed to charge under Britain’s energy price cap. Although these costs can be recovered via a levy that ends up on consumer energy bills, it can take two years.
Colorado Energy gave no further comment on Wednesday other than to assure customers that their energy supplies would remain secure and any credit balances would be protected.