Whoop Energy and XCel Power have ceased trading – affecting around 550 customers.
Consumers from both energy firms will be designated a new supplier by market regulator Ofgem – through its supplier of last resort process.
Whoop Energy (Whoop) provides gas and electricity to 262 customers, including 50 households (domestic consumers).
XCel Power (XCel) is a gas only service, that is responsible for 274 non-domestic customer accounts.
Neil Lawrence, director of retail at Ofgem, said: “Ofgem’s number one priority is to protect customers. We know this is a worrying time for many people and news of a supplier going out of business can be unsettling.”
Under the regulator’s safety net, customers’ energy supply will continue, and funds that domestic customers have paid into their accounts will be protected, where they are in credit.
Domestic customers will also be protected by the energy price cap when being switched to a new supplier.
However, the costs facing households remain stark, as the mechanism was hiked 54 per cent earlier this month.
From April, the price cap will rise to £1,971 per year for average use, with industry experts warning of further price rises this spring.
The price cap is currently set at £1,277 and had prevented suppliers passing on soaring wholesale costs – which rose five-fold over 2021.
Following XCel and Whoop exiting the market, 28 firms have collapsed since September while Bulb Energy has entered de-facto nationalisation, being propped up by public money in the biggest state bailout since RBS in 2008.
This has directly affected over four million customers, with 2.3m being switched to surviving suppliers by Ofgem.
Currently, Ofgem is in the process of reforming the market to ensure suppliers are more resilient to future market shocks.
It is set to roll to financial stress tests to encourage hedging, and wants to review the price cap every three months rather than just twice a year as it currently does.
It has also announced temporary measures, such as requiring suppliers to offer the same deals to existing customers it does to potential new customers, and levies for taking on consumers from other firms.
According to Sky News, it is facing legal proceedings from a trio of adminsitrators, that are challenging the regulator’s creditor status at multiple fallen suppliers.
By City AM
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