(Bloomberg) -- A U.K. gas company that supplied 41,000 small enterprises is closing down just weeks after it said it would stop providing the fuel wholesale to other energy suppliers.
CNG Group Ltd., which is partly financed by commodities giant Glencore Plc, said it was “saddened” to be closing after 27 years, in a statement posted on its website. The firm supplied gas to companies in the U.K. including schools and restaurants, many of which may now face rising energy costs as they're transitioned onto different tariffs with a new supplier.
“This is a really sad day for the industry and a really sad day for the company,” Chief Executive Officer Paul Stanley said by phone.
CNG had tried unsuccessfully to sell off its business accounts with the help of restructuring firm Interpath Advisory. Its customers are now set to be allocated a new supplier by regulator Ofgem in its supplier-of-last-resort process, which may mean they face being moved to a “deemed tariff” at a much higher cost than they pay now, depending on when they arranged their existing rate.
Read more: Three More U.K. Energy Suppliers Collapse After Price Spike (1)
Surging gas prices in Europe have pushed up costs for energy suppliers, with a clutch of household suppliers leaving the market since August. One significant issue has been a regulator-managed price cap that limits the costs that can be passed onto U.K. household consumers. There's no similar cap in place for businesses, in theory giving firms like CNG more leeway to charge higher rates.
However, the company's balance sheet suffered heavily as the household suppliers that bought gas from CNG went out of business. It announced the closing of its wholesale business last month, when it served about 18 small utilities, some of which have themselves now entered the supplier-of-last-resort process.
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