Robert Peston has branded the energy market as a “crazy system” as many people are going to struggle to pay their energy bills.
The co-host of the Rest is Money podcast explained the big issue is that the Government have not announced a subsidy this year to take the pressure of rising bills.
Since Ofgem changed their price cap review time to every three months, instead of six, many smaller energy providers have gone bust as they were not able to keep up with the change in energy prices.
In 2021 smaller energy companies became increasingly popular and eventually controlled 40 percent of the market share.
However, presenter Steph McGovern explained the Ukraine War ramped up sale prices and caused “total chaos” in the energy market.
The smaller companies which had a good run with wholesale prices, were suddenly starting to collapse.
Octopus was able to weather the storm and has now become the 2nd biggest energy provider in the UK.
The provider was able to take over 1.5 million Bulb customers when the firm went bust and are now on track to take on Shell customers too.
Ms McGovern changed providers to a smaller challenger energy company and in the space of six months she changed providers unknowingly about four times as every company she had then went bust.
Mr Presnton said: “The reason companies like Bulb got in trouble during the energy crisis is because we have this crazy system where the regulator used to set the price every six months to what the maximum can be (the price cap) to now setting it every three months.
“But during the energy crisis, the price cap was set way below the market price of energy.
“Sensible providers would have bought their energy forward so the cap price is the same you’re paying for energy.
“But if you haven’t bought all your energy forward, which lots of the small companies haven’t, you have to pay an enormous price for energy and give it to your customers at a much lower price which is unsuitable and that’s why they went bust.”
He explained that Britons are now looking for providers with the best service over prices as many providers are offering similar prices to match the price cap.
As an Octopus customer, Ms McGovern praised their customer service as they incorporate technology and energy to provide efficient and in-depth service to all customers.
