Additionally, experts at Cornwall Insight say that household energy bills will go up by a record 30 percent or £383 to £1,660 next April, when regulator Ofgem next reviews its price cap. The warnings come after UK wholesale gas prices hit a record high of 400p per therm at lunchtime yesterday, before falling back on news that Russia will increase supplies to Europe.
Nine home energy suppliers failed last month due to rising wholesale prices. They served more than 1.7 million customers between them and had 6 percent of the market.
And wholesale energy prices are expected to continue rising.
Joanna Fic, Moody’s senior vice president, said the rising prices, combined with a green levy called the Renewables Obligation payment that has to be paid by the end of the month, will push more struggling power suppliers under.
The failures of more energy companies could push the total bill well past £1billion, according to Moody’s, as competition is taken out of the market and consumers have to pay more to heat and power their homes.
“The cost of energy supplier failures and higher energy bills will exacerbate affordability concerns,” she said.
Even though the collapse of more challenger household power suppliers would benefit the Big Six like E.ON and British Gas, Moody’s says that their finances initially will be squeezed by having to take on the customers of failed suppliers.
Ofgem raised its price cap, which protects consumers on a supplier’s standard tariff from being overcharged, at the start of the month by 12 percent or £139 to £1,277 to reflect the surging wholesale prices.
However, with both gas and electricity costs continuing to rise globally, Cornwall estimates that the price cap could soar at Ofgem’s next six-monthly review in February, which takes effect on April 1.