The energy price cap is set to rise by almost £700 in April (Lauren Hurley/PA)
(Picture: PA Archive)Bill payers could face a £2.4 billion hit from the energy crisis following the collapse of multiple British energy suppliers, estimates from energy regulator Ofgem suggest.
The figure relates to claims made by existing energy companies as part of Supplier of Last Resort rules, under which customers of collapsed suppliers are passed on to new suppliers in exchange for an Ofgem grant to cover handover costs. SoLR claims totalling £1.84 billion have already been made, Ofgem said.
The claims are set to cost £94 per household, according to Citizens Advice.
It comes as overall inflation is set to reach 7.4% in 2022, according to estimates by the Office for Budget Responsibility.
From April, the energy price cap will rise by almost £700 to £1,971 per year, reflecting the sharp rise in natural gas prices to reach near-record highs. The winter price cap will further exacerbate cost of living pressures, being set to rise by £500 to reach £2,500 per year, according to estimates by analyst Cornwall Insight.
The majority of the costs under the SoLR scheme relate to firms buying wholesale energy supplies for new customers, according to Ofgem.
Over 30 energy companies have gone bust since the start of 2021, including the likes of Bulb Energy, Avro Energy and Pure Planet.
Some 4.6 million customers were forced to switch suppliers because of collapsed energy companies, based on Data provided by Citizens Advice and Ofgem. The largest supplier to collapse, Bulb Energy, had over 1.7 million customers.
Ofgem disclosed the SoLR costs as part of written evidence to an inquiry into energy pricing held by the House of Commons’ Business, Energy and Industrial Strategy Committee.
