Together Energy becomes latest provider to cease trading

Under Ofgem’s safety net, customers’ energy supply will continue and funds that domestic customers have paid into their accounts will be protected. Domestic customers will also be protected by the energy price cap when being switched to a new supplier. 

Together Energy is the latest provider to go bust following the record wholesale gas prices in the UK, reaching as high as 450p per therm just before Christmas. These record costs, according to energy market researcher Cornwall Insight, could lead to the winter 2022-23 default tariff increasing to approximately £2,240 per annum - just under £1,00 higher than the current £1,277 per annum, which is itself a record high. 

In addition to the 26 suppliers that have gone bust since last August, Bulb - the UK’s seventh largest energy supplier - has entered into special administration. Towards the end of November, the government announced it had set aside £1.69bn to support the company. 

These collapses, according to research from Investec at the start of December, could cost households £120 each. 

In recent weeks, there have been various suggestions as to how to address the current crisis. According to the Financial Times, energy industry executives have pitched a mechanism similar in design to the “contracts for difference” subsidy scheme designed to support renewable energy. 

Under this mechanism, ministers would have to agree with the energy industry on a wholesale price level that they believed consumers could tolerate - and if prices rose above that level, suppliers would receive payments from the government. 

Last week The Times reported that the treasury is reviewing the Energy Company Obligation, a £1bn levy which adds £29 to the average annual energy bill and supports about 200,000 households a year.

The treasury is also said to be reviewing all green levies, including more substantial ones for renewable energy, as well as drawing up plans for a windfall tax on oil and gas - something that has been proposed by Labour and would raise £1.2bn. Ministers are however concerned that increasing taxes on energy producers could disrupt suppliers. 

Other options officials are reportedly considering include facilitating billions in loans to energy companies to help them with the cost of increased gas prices over a number of years, and cutting VAT on energy bills.