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Energy crisis: Avro Energy collapsed owing £90m to customers

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BRISTOL, ENGLAND - AUGUST 07: The early morning sun shines on houses in Bristol on August 7, 2009 in Bristol, England. According to recent surveys by two of the UK's largest lenders, house prices actually rose for three months in a row, suggesting to some commentators that the worst of the housing market slump may be over after house prices have fallen on average by 20 percent. However, while the figures were generally welcomed with caution by some, other factors such as rising unemployment and interest rate rises may still dampen house prices. (Photo by Matt Cardy/Getty Images)

Avro Energy ceased trading still owing £90m to customers, according to its administrators. 

Alvarez and Marsal said the challenger firm had failed to supply customers who had paid for gas and electricity in advance.

Avro was tussling with industry-wide challenges such as soaring wholesale prices which had increased energy costs for suppliers six-fold since the start of the year.

It was also struggling to provide industry payments of £56m to support renewable schemes.

Overall, the Leicestershire-based company was predicting funding needs of £258m by March 2022.

Avro failed to raise investment despite contacting 132 parties and notified Ofgem on September 17 that it was set to go bust.

Ofgem wades in as firms struggle with soaring wholesale costs

Prior to its collapse, Avro Energy was responsible for 580,000 customers and received no external funding, relying instead on capital from trading.

Founded in 2015, it is the largest of the 21 energy supplies to have left the market since the start of September. 

Stranded customers at failed suppliers are passed onto a new company that is obliged to honour domestic credit balances. 

However, firms can recoup the costs from the rest of the industry, which typically leads to them being passed onto consumer bills. 

Ofgem is carrying out consistent financial checks on suppliers amid fears more could go bust this winter due to the global gas supply crunch.

So far, half the dual-suppliers of gas and electricity have left the UK energy market this year.

The regulator recently threatened to strip five suppliers, including the now defunct Social Energy Supply, of their licenses.

The companies each failed to hand over £500,000 from customers to support a renewable scheme.

Ofgem has also announced it is launching a consultation into the consumer price cap, with expectations it will rise by as much as 20 per cent next spring.

It wants to ensure it “reflects the costs, risks and uncertainties facing energy suppliers”.

The findings will be published by February 2022.