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Effortless Energy (trading as Go Effortless Energy) has become the second supplier to fail this year, and the first since the Covid-19 pandemic began.
Utility Week recently revealed that the Stoke-based supplier was looking to exit the market, having previously entered level two credit default with code administrators Elexon.
The company is believed to have requested to enter the supplier of last resort (SoLR) process in July.
Ofgem will now choose a new supplier to take on the 2,500 domestic customers, as well as a small amount of non-domestic customers.
Effortless was founded in 2013 by Andrew and Melanie Burns after the couple became “frustrated and confused” by the deals being offered by incumbent suppliers.
The company was initially set up to provide energy to friends and family at a competitive price, but later opened the service to the wider community once the costs of running an energy supplier became apparent.
So far in 2020 only one other supplier, Gnergy, has entered the SoLR process. Last year however, a total of nine suppliers ceased trading.
Speaking to Utility Week last month, a number of industry experts said they expect to see more suppliers exit the market over the coming winter.
Ben Bugg, principal, strategy and transaction advisory, BFY Group, said his company believes there is scope for up to eight retailers to either exit the market or merge with another company before the end of 2020 alone. In 2021, it expects up to an additional 10 suppliers to do so too.
He added: “Prior to lockdown, some challengers will have been putting out cheap prices that were either breakeven or loss making when based on a 12-month hedge at that time. They’ve gone into the pandemic partially hedged and benefited from the falling wholesale prices.
“Their cash outflow is lower than expected which, without adjusting for payment holidays and cancelled direct debits, is helping them build up a stronger cash balance which is why you won’t be seeing as many suppliers entering SoLR yet. But I think it is not a question of whether they’ve been able to save themselves, they’ve just been able to buy more time.”
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