A UK company backed by Glencore that supplies natural gas to utility companies has said it can no longer continue its services, raising fears of another string of failures in the crisis-hit British retail energy market.
Yorkshire-based CNG Group, a gas shipping company that supports 15-20 retail energy suppliers via its wholesale business, has written to its customers advising them they should move quickly to find an alternative gas provider.
CNG has come under pressure after record wholesale gas prices caused some of its customers to fail leaving unpaid bills, according to one person familiar with the situation.
A dozen retail energy suppliers have failed since the start of August as record wholesale gas prices have left many with inadequate hedging strategies struggling to buy the electricity and gas they had committed to supply households at spot prices.
Paul Stanley, chief executive of CNG, told the Financial Times it was working “constructively and collaboratively with industry counterparts to try to find the best possible outcome in these challenging conditions”.
He added that “industry protocols” meant that supply to consumers would not be affected.
The move is the latest illustration that the energy crisis is starting to hit businesses even with the backing of some of the UK’s largest listed companies.
BP-backed Pure Planet, a retail energy supplier with 235,000 customers, was one of the latest providers to go bust on Wednesday because of wholesale gas prices that are more than five times the level of a year ago.
UK business Secretary Kwasi Kwarteng has so far been content to let existing regulatory processes handle the fallout from failed suppliers. But energy companies have warned the scale of the crisis is likely to overwhelm the “supplier of last resort” system, where customers of failed businesses are transferred to other providers.
The problems faced by CNG may cause greater consternation given they threaten to potentially further weaken providers.
Glencore, which has a market capitalisation of £50bn, said in a statement it had provided “substantial financial support to CNG through challenging market conditions” and was “engaging with the regulator in the hope that a solution can be found”.
The news that CNG had contact its customers saying it would no longer be providing them with gas was first reported by the BBC’s Newsnight.