Chris Gauld: rising costs hammering sector
Ovo Energy has made a conditional offer to buy Spark Energy and take on its near 300,000 customers after the Borders-based company’s supply business ceased trading on Friday.
Spark Energy Supply employs around 400 staff and became the seventh company in the sector this year to fail due to rising cost pressures.
The company was handed a £14 million bill by the energy regulator Ofgem for on-payment of its renewable power obligation.
Under Ofgem’s safety net, the energy supply of Spark Energy’s 290,000 customers will continue as normal. The outstanding credit balances of domestic customers will be protected.
KPMG has been advising on a switch of the supply business to Ovo, a company with 880,000 customers.
Ofgem is advising customers not switch to another energy supplier and to take a meter reading ready for when their new supplier contacts them.
It says this will make the process of transferring customers and paying back their outstanding credit balances, as smooth as possible.
Mary Starks, Ofgem’s executive director for consumers and narkets, said: “Our message to energy customers with Spark is there is no need to worry, as under our safety net we will make sure your energy supplies are secure and your credit balance is protected.
“Our advice is to ‘sit tight’ and don’t switch. You can rely on your energy supply as normal.
“Although we have seen a number of supplier failures this year, our safety net procedures are working as they should to protect customers.”
The demise of Spark follows news earlier this week of Extra Energy ceasing to trade. Ofgem appointed Scottish Power to take on supplying Extra Energy’s 108,000 domestic customers and 21,000 business customers
The other failed energy suppliers this year are Future Energy, National Gas and Power, Iresa Energy, Gen4U and Usio Energy.
The energy market has been hit by tough regulation, including a Government-enforced price cap on standard variable tariffs amid anger over rising bills.
Spark chief executive, Chris Gauld, and finance chief Hamish Osborn, led a management buyout of the firm in 2016.
Mr Gauld said last week that the rising costs of wholesale energy and the price cap were hammering the sector.
Spark was founded in 2007, has a turnover of more than £200 million and also has around 15,000 broadband and telecoms customers.