Brilliant Energy collapse and SSE punish displaced customers with price hike

Small energy supplier, Brilliant Energy, have become the latest in a long line of failed UK energy suppliers. Supplying around 17,000 domestic customers, the company folded last month, becoming the third this year and the 11th since last January.

Based in Gosforth, the company had been under financial stress for some time. Ofgem noted that they failed to make their Renewables Obligation payments by the deadline. Brilliant Energy supplied their own customers and a number who were served under a white label deal with Northumbria Energy.

Already this year we’ve seen the demise of Coventry based Economy Energy and Scottish not for profit OurPower . Between them they had over 270,000 customers.

Altogether, around a million domestic energy customers have lost their supplier since the beginning of last year. Ofgem are just weeks away from introducing tougher new rules to those looking to

start an energy supply company , which are hoped to prevent unsustainable businesses from trading in the UK.

Shortly after the collapse was revealed, SSE were announced as the supplier of last resort (SoLR) for Brilliant Energy’s17,000 customers. As usual, SSE were expected to honour all outstanding credit balances, both of current and former customers of Brilliant Energy.

SSE are having a good year, being named 'Best Large Supplier’ in the uSwitch awards and coming in second in the Citizen’s Advice league table of suppliers. They claim to have the lowest number of complaints to the Ombudsman and looked like a good choice for this displaced group of customers.

Ofgem said that they had “appointed SSE, which will offer Brilliant Energy’s customers a competitive tariff for their energy.”

However, customers who were moved to SSE were somewhat surprised to learn they were not, in fact, offered a competitive tariff at all. All the accounts switched to SSE were placed on their standard variable tariff, traditionally a suppliers most expensive tariff.

As a result, customers saw their bills rise on average by £281 a year. Some discovered that their new energy supplier was going to come in as much as £400 more expensive than their contract with Brilliant Energy would have been.

Customers are, of course, within their rights to switch supplier as soon as SSE take control of their account. However, trends show that many will simply ride it out, hoping enough protection is provided by the energy price cap.

While it would be callous to wish more failures on suppliers in the UK energy market, it’s clear that the problem is far from over yet. At 31st October 2018, a total of 13 suppliers had been named as failing to meet one or more of their financial obligations to Ofgem, a sure sign that things are not well with the financial health of the supplier.

Several have already folded; Economy Energy, Extra Energy and Spark Energy were all on the list. Snowdrop Energy were too and are already in the process of exiting the market.

All eyes are on the remaining firms named on the list who are, as of now, still trading. URE Energy, in particular, have been issued with an order to fulfil their payment obligations by the end of March, although there’s no word as yet as to whether they’ve settled their balance.

Also under stress are Avro Energy, who have failed to meet requirements relating to the smart meter rollout. They’ve been issued with a final order for compliance by the regulator. If they fail to meet the requirements, they could be banned from taking on new customers.

Dyball Associates are proud to help new supply businesses successfully launch in the UK market.

Through our energy market consultancy services, and the software we've developed, we're supporting new UK electricity and gas suppliers get set up and start supplying.

Follow us on LinkedIn to keep up to date with the latest news and updates in the energy industry.