In essence, GB Energy was taking money from customers (in advance), selling customers fixed price energy contracts and using the cash to punt on volatile wholesale energy markets in the hope that spot prices would stay below the price at which they sold to customers.
The announcement that GB Energy has ceased trading demonstrates the current challenges facing some suppliers in the wake of rising wholesale costs as they seek to fulfil rates guaranteed to customers through fixed price deals
Andrew Beasley, Managing Director of Flow Energy, said: “There has been a surge of new entrants and challengers to the energy market in recent years, and whilst more choice and competition is positive for consumers, there has never been a greater need for suppliers to ensure stable commercial strategies underpinned by the sufficient investment and financial strength to survive.
“This would seek not only to safeguard consumer accounts, but would ensure best practice and responsibility within the industry.
“For example, Flow is a stock market listed company with strong financial resources and a robust, hedged trading strategy via its relationship with Shell – something which is not true of all challenger suppliers.
“Competition in the retail energy markets must exist to serve the needs of customers, who want lower prices and a better service.
“They also want more than just a commodity from their supplier through product and service innovation, and the peace of mind of knowing that their energy company is safeguarding their future, as well as its own.
“In turn, customers must look beyond simply low prices when seeking a supplier, to providers offering attractive prices, good customer service and something extra.
“What is important in light of this announcement is that customers do not now feel deterred from selecting challenger suppliers.
In contrast to recent years when the Big Six energy firms held a monopoly, the UK market is now hugely competitive, due almost exclusively to the efforts of challenger suppliers, and this must continue if we are to ensure the energy market works for the benefit of consumers in the long-term.”