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Thursday, July 12, 2018

First Utility says newer energy firms will go bust

Smaller suppliers operating 'house of cards' model that will collapse, says chief executive.

A challenger UK energy company launched a decade ago has said newer, smaller suppliers are operating a "house of cards" model that will collapse and result in firms going bust.

First Utility says newer energy firms will go bustColin Crooks, the chief executive of First Utility, said many of these energy firms were undifferentiated and exposed to volatility in wholesale prices.

Crooks cited Flow Utility, which he said was "basically bankrupt" when it was bought for £9.25m by the mid-sized supplier Co-operative Energy.

"There's a lot of small suppliers playing exactly the same game … I just see this house of cards actually tumbling down," he said.

First Utility is the eighth biggest supplier with 825,000 customers, behind Ovo with 1 million and the big six who control 80% of the market. Crooks took the reins four months ago, after Shell bought the supplier.

Crooks hit out at bigger and smaller players alike, saying the model that allowed First Utility to grow to scale no longer existed. Smaller suppliers offered loss-making tariffs while the big six used customers on high-priced default tariffs to cross-subsidise cheaper fixed ones, he said.

 

Read the full story at The Guardian.