Ofgem is likely to have plenty of options to choose from as it appoints a supplier to absorb the customers of Future Energy, a retail market expert has suggested.

Future Energy, a regional supplier with around 10,000 domestic customers centred around the North East and Yorkshire, announced its closure yesterday (25 January) without explanation.

Robert Buckley, research director at consultancy firm Cornwall Insight, told Utility Week: “If the calls that have come into this office over the last 24-hours are anything to go by there’s a lot of interest from suppliers of all different shapes and sizes in acquiring the customers of Future Energy.”

An article in the Telegraph quoted an industry source who predicted that, bearing in mind the relatively small number of accounts up for grabs, one of the big six suppliers would be most likely to take on Future Energy’s customers in an effort to win brownie points with Ofgem.

Buckley disagreed, saying he expects there to be a “very competitive” process to appoint a supplier of last resort: “I don’t think it’s a question of doing favours for anybody. I think there’s a lot people out there who are interested in taking on these customers.”

He also warned against reading too much into the closure: “We don’t know the circumstances behind the supplier, what caused it to fail and it’s a very particular company with a very particular business.”

On the other hand, Buckley said the retail sector does appears ripe for consolidation given the high level of customer churn in certain parts, “particularly in the price sensitive online fixed market”.

“If you just look at the distribution and the number of companies in the market and the number of customers that they’ve got, you would think that some kind of consolidation might occur,” he added.

Buckley said Ofgem’s arrangements for dealing with closures appears to be working well. He noted that in the case of GB Energy Supply, whose 160,000 customers were transferred to Coop Energy after it closed in November last year, not only were energy supplies uninterrupted, but customers were also able to continue on their existing tariffs.

“I’m sure Ofgem is looking at this very carefully but if you examine the evidence of what has occurred, it looks like what they’ve got in place is capable of managing it,” he added.

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