Energy companies begin absorbing customers from bankrupt competitors

Energy companies have begun the process of absorbing customers from their now-defunct competitors after the huge spike in gas prices put many firms out of business.

Shell Energy is to take on 255,000 former customers from Green, while Octopus Energy will take on Avro’s 580,000 customers.

Energy watchdog Ofgem has had to find providers for more than two million energy customers over the past month after soaring natural gas prices drove the collapse of seven small suppliers.

The price of wholesale gas has surged by 250% since the beginning of the year and has risen by 70% since August, according to figures from Oil & Gas UK, putting pressure on UK suppliers.

Ofgem said they did not expect any disruption as the customers were transferred to their new suppliers.

All former and current customers will have any outstanding credit on their balance honoured under the agreement, with no interruption supply predicted during the handover.

The regulator added customers will be contacted over the coming days about the change and are being advised to wait until the transfer is completed before deciding if they wish to change suppliers.

Green, which was registered as Green Supplier Limited, collapsed just days after the firm’s chief executive, Peter McGirr, warned that the outlook was “looking bleak”.

The transfer has been carried out under the “supplier of last resort” scheme to protect customers of failed energy companies.

Every customer of a failed energy company costs the rescuing company £600 to £700 to “on board.”

The companies have a right to reclaim this money by adding an extra charge to every domestic energy bill in the country, with ITV News Political Editor Robert Peston predicting this could cost every bill payer up to £90 if more struggling firms went bust.

This would be on top of the rise in the energy price cap which is expected to hit already struggling families hard.

Neil Lawrence, Ofgem’s director of retail, said when discussing the transfer of Green's customers: “We understand that this news may be unsettling for customers, however, they do not need to worry.

“Their energy supply will continue as normal, and customer credit balances will be honoured."

Once the transfer is complete the affected people will be able to switch to another supplier if they wish.