Energy firm killed off by soaring costs

A TREND-SETTING low-cost energy firm has shut down – leaving 160,000 customers in the lurch amid fears that its downfall could kick-start a wave of closures.

GB Energy Supply’s shock closure over the weekend has been blamed on soaring wholesale prices, which made its ultra-cheap prices unsustainable.

Experts said it highlighted a growing problem for the industry, with many smaller players struggling to turn a profit.

The price of oil has doubled since January and is now hovering under $50 a barrel, while wholesale electricity costs are up by more than a fifth.

Energy costs for households have climbed 7pc in the past two months, from £784 to £839 a year, according to MoneySuperMarket.com.

Emma Bush, of the switching website uSwitch.com, said: ‘GB Energy Supply is the first domestic energy supplier to go out of business in a decade.

‘But rising wholesale prices this year are making for some tough market conditions for new independent suppliers in particular. Many of them have recently increased bills.’

launched in Preston in 2014, GB sought to take on established providers by offering market-beating rates.

It made headlines last winter by introducing the first variable dual-fuel tariff under £800 in four years – nearly a third cheaper than average.

But the firm unexpectedly shut up shop over the weekend, blaming ‘swift and significant increases in energy prices’.

The watchdog Ofgem will move GB’s 160,000 customers to a new supplier, but some are likely to see their bills go up.

They are advised to take a meter reading and wait for the new firm to contact them. They will then be free to look for a better rate from rival suppliers.

In the meantime, customers will be able to use gas and electricity as normal.

There has been an explosion of competition in the energy market since the advent of the internet, which made it far easier for families to shop around for a good deal.

nearly 578,000 people switched supplier in October alone, a threeyear high, with 41 firms to choose from. In 2015, more than 6m moved to a different company. Meanwhile, the Big Six suppliers – British gas, EDF Energy, E.On, npower, Scottish Power and SSE – have faced criticism for over-charging.

But there are fears that smaller rivals will struggle to compete if prices keep rising. Ben Jones, managing director of established company Extra Energy, said more than 20 other firms lacked the financial strength to survive.

‘Once one or two go, it will be a domino effect,’ he said. ‘It’s just a matter of time.’ GB boss luke Watson himself admitted in June that volatile wholesale prices were his biggest concern.

The firm unexpectedly increased the price of its variable tariff by 30pc last month.