A North East energy firm that has become the latest to go out of business has hit out at Government suggestions that ‘bad business practices’ led to its demise.
In a statement released as it went out of business, Newcastle’s Green - which employed 185 people at its offices in The Core - said a number of factors, some linked to Government policies, had meant it could not carry on in business.
Business Secretary Kwasi Kwarteng has said a number of times that the Government would not support ‘failing companies’, arguing that some of the firms that have gone bust should have taken action to prepare for rising wholesale energy costs.
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But Green said that a combination of factors had led to ‘unprecedented’ prices, and added that a number of Government policies had made conditions impossible for smaller companies in the energy sector.
The company said: “The current market conditions are unprecedented, with record wholesale energy prices pushing the cost of energy above the price cap. The fire at the National Grid interconnector site in Sellindge on September 15 led to wholesale electricity and gas prices reaching new record highs. Beyond the fire, 2021 has seen incidents at other production sites, unplanned outages, high demand for Liquefied Natural Gas (LNG) tankers, Brexit, the Suez Canal incident, and the Beast from the East II to name but a few.
“This means that Green, like all other energy suppliers, are selling energy to customers at a loss. The price cap is calculated based upon a historic observation period, which means that it does not accurately reflect current market conditions.
“Over the past week, we have been vocal in calling out Ofgem and the Government for creating a regulatory environment which has led to five energy suppliers collapsing in the last six weeks.
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“Green, in conjunction with 14 other small energy suppliers, wrote to Ofgem, the Prime Minister, the Business Secretary, and the Chancellor of the Exchequer, asking for the energy price cap methodology to be reviewed and for an immediate support package to be assembled. Combined, the signatories account for over 1m customers and 2,000 staff.
“Although Green, like many other small suppliers, have been accused by the Business Secretary of bad business practices, the reality is that the soaring energy prices are due to a global gas shortage.”
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Green added that a number of factors ‘outside of its control’ had had a significant impact on its business.
It said that people had been using more energy at home during lockdown, putting more demands on the company and forcing it to buy energy at additional cost.
Rules that forced it to give payment holidays during the pandemic also hit its cash flow, it said.
The company added: “Green fears that smaller energy suppliers are being left behind by the Government, with rescue packages being put in place for larger suppliers and for private discussions to be held with the Business Secretary.
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“There is a position in Government and Ofgem that smaller suppliers should be left to fail, despite the unprecedented increases in wholesale electricity and gas, the cost of failed suppliers being mutualised across the industry, and an outdated price cap methodology forcing smaller suppliers to sell at a loss.”
Green became the fifth energy supplier to go bust this month, with a total of 1.5m customers affected. All will be passed to other suppliers, though it is feared that their bills will rise substantially as a result.
As well as Green, PFP, MoneyPlus, Utility Point and People’s Energy all exited the supply market in just over two weeks. Together all the recently failed companies account for more than 5% of the market.
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