GB Energy closure could trigger ‘domino effect’ and raise prices for consumers

Small energy companies could face a struggle to make it through the winter after GB Energy Supply became the first domestic supplier go out of business in a decade.

Household bills could rise, after what one energy boss said was “the first of many” casualties likely to hit the sector, reducing competition.

Doug Stewart, chief executive of Green Energy UK, said: “The closure of GB Energy is as a result of loss-making tariffs coming home to roost.

“The collapse of a small ‘cheapest tariff’ supplier shouldn’t come a surprise. It’s been predicted for some time. The cheapest deal just isn’t sustainable.”

Mr Stewart said the closure could see other consumers’ bills rise if the industry fund recompenses GB customers who have lost their deposits.

Ben Jones, managing director of Extra Energy, said around half of the 41 challenger suppliers do not have the level of investment or financial strength to survive.

“Once one or two go, it will be a domino effect,” he said. “It’s just a matter of time.”

Ofgem, which will appoint a new provider to replace GB Energy, said customers of the defunct brand will not face any supply disruption or lose any outstanding credit balances.

The regulator unveiled a “safety net” just last month to protect consumers’ credit balances if they have paid for energy in advance.

Ofgem said that the levy would be spread across all energy customers but would only have a small impact on bills.

GB Energy, which ceased trading over the weekend, had around 160,000 customers.

In a statement published on the three-year-old company’s website on Saturday, managing director Luke Watson put the closure down to “swift and significant increases in energy prices over recent months”.

Mr Watson said that, as a small supplier, “our inability to forward buy energy to allow us to access the best possible wholesale prices means that the position of the business has become untenable.”

The announcement came a month after GB Energy, which launched the cheapest fixed-rate deal on the market in May, raised its prices by almost a third.