Blog Post

Energy Crisis deteriorates as Daligas exits the market and CNG’s exit could create a domino effect of closures

Richard Simmonds • Oct 15, 2021

With every passing day, the situation in the UK energy sector goes from bad to worse and there’s no indication the bad news will end anytime soon. Adding to the crisis was the announcement that Daligas has closed but more seriously was gas shipper CNG’s exit from the market.

Collapse of Daligas

The collapse of the small gas retailer Daligas marked the third energy supplier to exit the market this week.

It may have had just 9,000 customers but its collapse highlights the increasingly difficult position surviving suppliers are in.

In a statement, the company said that it was ‘unable to keep its team and its business operating because of the crisis currently roiling the energy sector’ and blamed Ofgem’s energy price cap for exacerbating the problems caused by the surge in wholesale gas prices.

The casualty list of energy suppliers in 2021 currently contains; Simplicity, Green Network Energy, Hub Energy, MoneyPlus Energy, PFP Energy, People’s Energy, Utility Point, Green. energy, Avro Energy, ENSTROGA, Symbio Energy, Igloo Energy, Colorado Energy, Pure Planet and now Daligas.

More market exits are predicted with some reports suggesting that we could see another four announce their closures by the end of the week.

Also read: What has caused the Energy Market Crisis and what does it mean for the energy retail market?

CNG’s market exit will result in more supplier failures

Following yesterday’s announcement that gas wholesaler, CNG had exited the market fears have grown that a domino effect could ripple through the already battered energy sector.

The gas wholesaler supplied gas to eighteen energy suppliers and said that all deliveries will be stopped. The company had been hit hard by the collapse of several of its major customers, including Avro Energy who had according to CNG not paid for the gas supplied to households.

According to Bloomberg news one of CNG’s former customers, Xcel Power Ltd has confirmed that it is preparing to exit the market.

CNG told companies it supplies they would need to buy gas from elsewhere. That is likely to mean a sharp rise in costs for retail suppliers and hundreds of small businesses.

There are already fears that thousands of small businesses could be forced to close as a result of high gas prices, further hikes will surely lead to those fears becoming a reality.

CNG, which has debts to shareholder Glencore Plc, supplies gas directly to small- and medium-sized businesses across the country, including schools and restaurants. Friday is the deadline for bids to purchase those contracts via restructuring advisers.

Also read: Pure Planet and Colorado Energy exit the market and CNG announces it will stop supplying gas to its utility clients