Why some energy firms going bust in UK?


In 2021, some small energy firms went bust in UK. Why did it happen?

These firms were re-sellers meaning they didn’t produce any gas or electric of their own. They bought wholesale gas/electricity from large producers and sold it to customers.

When customers signed up with them, these firms promised a price say £x. They used to buy energy at wholesale rate of £w (where x – w = their profit).

Since wholesale energy price went up suddenly, these firms had to buy energy at a rate W which is more than x, i.e. what customers paying them.

They can’t simply ask customers to pay more because they had contract with customers where customer would pay fixed price £x as previously agreed.

So these energy firms can no longer afford to purchase energy at cost W and in return get only x from their customers. So their business is no longer sustainable and hence they went bust.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: