Zog Energy has ceased trading, claiming it was unable to secure the gas hedges it previously agreed with its gas shipper CNG.
The Ipswich-based supplier, which served around 11,700 domestic gas customers, is the 27th energy retailer to exit via the Supplier of Last Resort (SoLR) process so far this year.
CNG Group’s retail arm, CNG Energy, exited the market with 41,000 business customers last month after being operational for almost three decades. Interpath Advisory has been confirmed as its administrator.
The group’s wholesale arm, which provided gas shipping services to a number of small suppliers, finally ceased trading on Tuesday (30 November). An administrator has been lined up and is expected to be formally appointed in the next few days. It has been advising CNG Group in the meantime.
In a statement, Andrew Cleveland and Tony Chester, who founded Zog Energy in 2012, said the company had always purchased gas in advance from CNG (Contract Natural Gas).
“However, Contract Natural Gas Ltd has withdrawn from the wholesale market and ceased to trade,” the statement added.
“Unfortunately the administrators of Contract Natural Gas Ltd are unwilling to transfer the gas hedges we had previously agreed.
“This has put us in an untenable position of having to purchase gas at the current market rate and we have no choice but to cease to trade.”
In response, CNG Group chief executive Paul Stanley explained to Utility Week that his company had looked to see if there were options to transfer the value of its hedges.
He said: “Many of the firms that worked with CNG’s wholesale shipping business did not have the scale to buy gas in the market for themselves and so bought through CNG in order to aggregate their demand with other smaller suppliers.
“As this is an aggregated position, there is no specific attachment of a defined hedge instrument to a specific supplier. In insolvency, the administrators and lawyers advised that any value in the hedges of the business are retained as an asset by the insolvent estate.
“We did investigate if there were legal options for transferring value in some way, but the legal and accounting advice was quite specific on this matter.”
Ofgem will now appoint a SoLR to take on the former customers of Zog.
Yesterday Scottish Power was confirmed as the new supplier for the more than 70,000 customers of recently failed retailers Entice and Orbit Energy.
So far this year almost 2.7 million customers have seen their supplier fail and have been appointed a SoLR. Additionally, large supplier Bulb entered administration with 1.7 million customers.