Energy crisis deepens as Orbit and Entice go bust amid soaring wholesale costs and price cap criticism

Two more energy firms fell victim to the deepening price crisis yesterday.

Soaring wholesale costs have caused over 20 energy firms to collapse since September.

Orbit Energy (Orbit) and Entice Energy (Entice) have ceased trading in the latest bleak chapter for the UK energy market.

Both firms bit the dust, amid rising supply costs and the restrictive energy price cap which limits charges to consumers,.

Over 70,000 domestic customers have been left in the lurch this winter, with 65,000 customers from Orbit and 5,400 from Entice in need of rescue from Ofgem’s supplier of last resort process.

Orbit attributed its painful demise to the current terms of the energy price cap, describing itself as a “well-run energy supplier”.

It criticised the government and the market regulator for imposing unfair market conditions on the energy firm.

The company said: “Sadly, the UK government and our regulator Ofgem, expects us to sell energy at a price far lower than the cost to buy – which makes operating unsustainable. It is with a heavy heart that we are confirming to you, our loyal customers, to let you know that despite our best efforts, supplying energy to UK households is no longer viable.”

This echoed doomed supplier Bulb Energy’s perspective, the UK’s seventh biggest energy company which fell into special administration and de-facto nationalisation earlier this week.

Bulb revealed the price cap limited charges to £0.70 per therm, even though its cost the battered energy firm £4 per therm to provide for customers.

The government is set to support Bulb and its administrator’s Teneo, with £1.7bn in public money over the next six months until they can find a buyer for the firm and its 1.7m customers.

Industry leaders such as Scottish Power CEO Keith Anderson and Utilita Energy founder Bill Bullen have both called for the price cap to be reformed, while Utility Warehouse described the situation as a mess in its recent results update.

Even the architect of the price cap, John Penrose MP, has pushed for it to be overhauled.

He said the pricing measure had “completely failed” and was the “wrong type of price cap”.

Under the Ofgem’s safety net, domestic consumers will continue to receive energy supplies and money already paid into accounts will be protected.

They will also remain shielded by the £1,277 a year price cap, that has proved so difficult for challenger companies to navigate amid soaring wholesale costs.

Neil Lawrence, director of retail at Ofgem, said customers “do not need to worry” and that the regulator will make sure customer energy supplies continue. 

He said: “You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your tariff.” 

Ofgem has committed to reviewing the price cap amid industry criticism, with findings from its review scheduled for February 2022. Meanwhile, the government told City A.M. on Monday that it remains committed to