By James Robinson for MailOnline

Published: 11:37 EDT, 1 December 2021 | Updated: 12:18 EDT, 1 December 2021

Energy firm Zog today became the latest victim of the big gas squeeze - making it the 25th UK power firm to go bust in the last three months.

Regulator Ofgem confirmed it would step-in to help the Ipswich-based energy  provider's customers after the firm collapsed earlier today.

The regulator will now announce a provider to take over Zog's 11,700 customers under its 'Supplier of Last Resort' scheme.

The scheme means customers will continue to have gas supplied to their homes by a new firm chosen by Ofgem.

Though their gas bills may rise, the cost will continue to be limited by the Government's Energy Price Cap scheme.

The collapse of Zog comes amid spiralling wholesale gas prices across Europe, which have squeezed smaller UK energy firms out of the market.

Zog is the 25th energy firm to go bust in the last three months, with Ofgem forced to find new suppliers for more than 2million households.

Energy firm Zog today became the latest victim of the big gas squeeze - making it the 25th UK energy firm to go bust in the last three months.

Regulator Ofgem confirmed it would step in to help the Ipswich-based firm's customers after the company collapsed earlier today. Pictured: Library image of a gas hob

It follows on from the collapse of Entice Energy, which had 5,400 households on its books, and Orbit Energy, which supplied 65,000 customers.

Customers for both firms were moved on to ScottishPower earlier this week. 

Suppliers need to buy gas before they sell it to households across Great Britain.

However the wholesale price of gas has rocketed in recent months. 

Because of a cap on household energy bills, suppliers have been unable to pass on the increased costs to customers.

And it has left smaller energy firms unable to continue. 

The price cap is reviewed once every six months, and is expected to rise significantly in April as a result of the gas price.

Until then, many energy suppliers will have to sell gas for less than it is costing them to buy it, or decide to call it a day.

The biggest firm to go bust so far is Bulb, whose 1.7 million households made it one of the top energy suppliers in the country.

When Bulb collapsed last week Ofgem and the Government were forced to use a special programme designed to prop it up.

Normally Ofgem would simply find a new supplier to take over a failed company's customers under the Supplier of Last Resort scheme.

But finding a home for 1.7 million customers would have proven difficult, and might even cause the new supplier to collapse, setting off a potentially disastrous domino effect.

There are no such worries with Zog, and its 11,700 customers will be transferred to a new supplier - which has yet to be announced.

It means customers can continue to use electricity and gas as normal, but should take a meter reading for when their new supplier gets in touch.

Ofgem director of retail Neil Lawrence said: 'Ofgem's number one priority is to protect customers. 

'We know this is a worrying time for many people and news of a supplier going out of business can be unsettling.

'I want to reassure affected customers that they do not need to worry, under our safety net we'll make sure your energy supplies continue.

Entice Energy (pictured right: The logo), which had 5,400 households on its books, and Orbit Energy (pictured right: The logo), which supplies 65,000 customers, are both closing their doors

Wholesale gas prices have sharply risen in the last few months (pictured: A graph showing the rise). Russia, a major supplier of gas to Europe, has been accused of limiting supplies to put pressure on the EU to approve a new pipeline bypassing Ukraine. Moscow has denied the claims. 

The company is selling gas and electricity for less than it costs to buy. This is because the Government’s price cap limits what suppliers can charge to under the current wholesale price of energy. 

The firm’s investors and lenders refused to continue supporting these losses, forcing it to shut down. 

The cap offers some protection for householders when wholesale prices surge, but it means that energy firms are running up massive losses.

Industry regulator Ofgem would normally appoint a rival energy firm to take on Bulb’s 1.7million customers under a regime known as the Supplier of Last Resort. 

In this case, there is no chance of doing so, at least in the short term, because no other firm is prepared to take on the costs and huge losses involved. 

A team of special administrators will run the company and buy and sell energy until another firm in the sector is willing to take on the customers.

How will it affect customers?

There is no risk to the supply of gas and electricity or any loss of credit that households have on their account . Customers will typically have been paying around £900 a year. 

Under the new regime, this figure is likely to rise to the official price cap of £1,277. The cap is due to be reviewed next April and is likely to rise by several hundred pounds.

What should they do now?

Consumer group Which? advises customers to do nothing and wait for information from Bulb. There is little point in shopping around for cheaper deals because there is nothing below the official cap and many energy firms are not taking on new customers.

Who will cover the losses in administration?

The most likely outcome is the losses will be passed on to all households through a levy on every bill applied over the next few years.

'Ofgem will choose a new supplier for you and while we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime.

'You can rely on your energy supply as normal. 

'We will update you when we have chosen a new supplier, who will then get in touch about your tariff.

'Any customer concerned about paying their energy bill should contact their supplier to access the range of support that is available.'

It comes as wholesale energy prices hit the second highest level in at least three years on November 15 - adding yet more pressure to already struggling firms.

Low wind speeds - prior to the arrival of Storm Arwen - were blamed for pushing wholesale energy prices for the peak period between 5pm and 6pm over £2,000 per megawatt hour.

It was only the second time they have surpassed this level since 2018.

Because of these low wind speeds, the UK power grid was forced to turn to gas and coal to power homes and businesses.

But wholesale gas prices have sharply risen in the last few months.

Russia, a major supplier of gas to Europe, has been accused of limiting supplies to put pressure on the EU to approve a new pipeline bypassing Ukraine.

The move, experts warn, could have a knock-on impact on Ukraine, which has become an area of tension between Russia and the West.

Wholesale gas prices fell in Europe last month after Russian gas flows resumed to Germany.

Moscow has pledged to increase supplies and ease concerns about shortages and high prices before winter.

Russia started pumping gas to Germany again via a pipeline from Yamal in Siberia, a day after a halt in exports had pushed up prices in Europe.

Russia provides a third of Europe's gas and its supply intentions are critical at a time when a surge in spot prices has hit households and businesses alike in Europe, underlining Europe's heavy dependence on Moscow for its energy supplies.

Russian President Vladimir Putin ordered state gas company Gazprom (GAZP.MM) this month to increase supplies to Europe and rebuild its inventories there once domestic storage tanks are replenished.

Moscow has denied withholding supplies to Europe to exert pressure on German regulators to approve gas shipments through the new Nord Stream 2 gas pipeline beneath the Baltic Sea. 

Germany has until early January to certify the pipeline.

Household bills could rise by as much as £60 to pay for the fallout of energy supplier Bulb as UK gas prices continue to skyrocket over winter.

The company was placed into administration Wednesday and the government has pledged to set aside £1.7billion to keep Bulb's 1.6million customers warm over winter. 

Bulb will be the first company to use the Special Administration Scheme - a contigency system that was designed to temporarily support energy suppliers deemed too big to fail.

Under the rules of of the scheme, Bulb will receive Government money to continue supplying gas and electricity to its customers during the administration period.

The system was devised in 2013, with the intention that the Government would later place the costs back on to the energy suppliers.

This in turn, means the price will be passed on to households through their energy bills. 

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