23% of the cheapest suppliers have exited the market since 2017
Latest research from Cornwall Insight’s Domestic Tariff Report highlights that since 2017, just under a quarter (23%) of suppliers with the cheapest tariff have left the market either through Ofgem’s Supplier of Last Resort (SoLR) process or by being acquired by another supplier.
Between the years 2015 to 2017 on average, four of the ten cheapest suppliers have exited the market via SoLR or been acquired by another supplier.
Kate Hill Senior Analyst at Cornwall Insight, said:
“Since 2017, 15 suppliers have exited the domestic energy market through Ofgem’s SoLR process. Although a myriad of reasons will have caused each exit, many of these companies are likely to have experienced cashflow issues, which will have been heightened by very cheap tariffs that were on offer.
“The cheapest deals are often used as an indication of market competitiveness, with consumers actively encouraged to switch to them. Though it appears that many have been unsustainably low as the suppliers that have offered them have been unable to support themselves and these low deals over the longer term.
“In fact, further research by Cornwall Insight shows that supplier exits have come around 16-months on average after appearing in the top 10 cheapest offerings, although this can range from within one month to 47 months later.
“Despite being mostly absent from the top spot in the past, large suppliers have now started to re-enter the 10 cheapest deals in the market. This is mainly due to a reduction in wholesale prices that have allowed these larger suppliers to offer their customers lower deals.”