Thousands of businesses in the Midlands have been left paying emergency rates on their energy bills after the collapse of supplier Electricity4Business.
E4B, which had 3,352 customers in the region, all of which were placed on emergency rates at British Gas Business by Ofgem when the Milton Keynes-based energy supplier went into administration.
One customer affected by the move was St Anne’s Hostel, in Highgate, Birmingham.
The hostel saw its rates go up to an estimated 14.75p a unit when they were moved onto the emergency rates at British Gas. This would have seen its yearly bills jump up to about £12,000 – nearly 50 per cent higher than the usual rate.
They are now paying a much lower rate after being moved onto Scottish Southern after advice from comparison company Make It Cheaper.
Make it Cheaper said the rates at British Gas that the former E4B customers had been put on could be up to three times higher than the cheapest rates.
They advised all former E4B customers to take a meter reading, cancel direct debit payments and find out what the cheapest options were for the future.
A supplier of last resort is appointed by Ofgem to carry on uninterrupted supply to customers whenever energy companies go into administration.
Jonathan Elliott, the managing director of Make it Cheaper, said: “E4B’s failure is a reality check that the market is no more competitive now that it was before deregulation.
“Situations like these also highlight the fact that businesses are subject to more onerous billing than homeowners when it comes to their electricity supply. The really scary thing is that, by giving the green light to even higher rates, a new price precedent will have been set by Ofgem and so every business will need to keep a closer eye on its bills in future.”
E4B provided power to about 40,000 small and medium sized businesses before it went into administration. All its supplies were cut off when the firm went into administration.
In a statement released on the day of the company’s collapse on October 22, administrator PricewaterhouseCoopers said the decision was taken “as a result of volatility in the energy market”, where small suppliers have been hit by the soaring wholesale price.
Industry analysts said the collapse of E4B raised fears about the safety of other small businesses operating in the energy market, which has been particularly turbulent this year.
And they said the market was being distorted by the lack of competition. Six suppliers including Eon and npower control more than half of the UK’s electricity production.
Reports at the weekend suggest BizzEnergy, Britian’s biggest independent energy supplier, could be on the verge of collapse after failing to refinance its debts.
The company have hired KPMG to try and initiate a quick sale but if that fails then the company is expected to go under with the loss of 160 jobs.