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Omni Energy tells customers that it expects to go bust by the end of November, Moody’s forecasts more closures

Richard Simmonds • Oct 07, 2021

Another day, another grim bit of news for the UK energy supply market after Omni Energy told its customers that it expects to cease trading by the end of November unless gas prices fall dramatically before the onset of winter.

Email to customers

According to the Guardian newspaper, the energy supplier sent an email to 10,000 customers saying; “The cost of wholesale energy is continuing to rise and without significant change in the wholesale cost of energy, or a government intervention, it is highly likely Omni Energy will cease trading before the end of November.”

The company also told its customers that it would begin to switch them to another supplier unless they objected.

Normally such a move would be done via Ofgem’s supplier of last resort scheme, however, in its email to customers, Omni stated that it did not believe that the scheme was suitable for its model which sees customers pay in advance for electricity via a meter.

Under the model, it warned that if they switch via the SoLR process they would put themselves at accidentally disconnecting themselves.

“To support you and to make sure we minimise the impact to you we recommend that you switch to another supplier as soon as possible,” it said. “To facilitate this, we have a switching partner that is going to switch your energy to another supplier that is at the price cap like us. They will select an energy provider who is better placed to supply your energy.

“If you don’t want this to happen, please let us know by responding to this email so that we can work with you to minimise any impacts of us potentially ceasing to trade,” Omni added in its email.

According to Omni it has started the process of switching its customers to its competitors but did say that there was ‘still hope that we may survive.’

If the company does exit the market, it will be the 13^th supplier this year to do so.

Also read: UK natural gas futures exceed the threshold of 400 pence a therm for the first time ever

Moody’s forecasts more failures in the sector

Credit ratings agency Moody’s said that the UK energy sector will see more supplier failures as wholesale energy prices continue to hover close to record highs.

It also said that it expects a swathe of closures to be announced at the end of this month following the Renewable Obligation payment deadline.

Joanna Fic, senior vice president at Moody’s, said: “The cost of energy supplier failures – which could well exceed £1bn and could be a multiple of that in a scenario with a higher number of market exits – and higher energy bills will exacerbate affordability concerns and the risk of credit negative political intervention. More failures will follow with Renewable Obligation payments due in October,” it said.

Also said: Ofgem vows to crack down on energy suppliers following increasing scrutiny of its own performance

Soaring Energy Bills forecast

Industry experts are now forecast that the energy price cap will have to rise by at least £400 when it is next reviewed by Ofgem in February.

Such an increase would mean the cost of gas and electricity for the average home will skyrocket to £1660 per year and send hundreds of thousands of households into fuel poverty.

I did warn you the news was grim…

Also read: Energy Price Cap rises to record high but it’s far below what is needed