Colorado Energy

Colorado Energy (Colorado Energy Limited) was a UK energy supplier, not to be confused with energy firms in the US state of Colorado. It ceased trading in 2021.

What happened?

• Colorado Energy ceased trading on 13 October 2021.
• Its electricity (and gas) supply licences were revoked shortly thereafter by the regulator Ofgem.
• At the time of its collapse the company supplied around 15,000 domestic customers.
• The customers were transferred to Shell Energy Retail Limited under Ofgem’s “Supplier of Last Resort” (SoLR) process.

Key numbers and metrics

• Number of customers: ~15,000 domestic.
• Date of cessation: 13 October 2021.
• Regulator action: Provisional Order issued 21 Sept 2021; Final Order published 29 October 2021.
• New supplier: Shell Energy (as transferee under SoLR).

Why it matters for UK businesses

• Even though Colorado Energy was a relatively small supplier (by UK standards), its collapse is symptomatic of the broader stress in UK supply markets during 2021 — marked by rising wholesale energy costs, regulatory pressure and margin squeeze.
• For business customers (and businesses that contract energy supply), this event highlights the risk of supplier failure: though domestic customers were protected under the regulator’s SoLR process, business customers often have fewer protections and may face more disruption or renegotiation.
• From a procurement and vendor-risk perspective: If a small supplier fails, contracts may need to be re-awarded, terms might change, credit balances may become uncertain, and service continuity needs checking.
• For businesses that may act as energy resellers, brokers, or part of supply-chain arrangements, supplier instability means extra due diligence on counterparties, hedging strategy of the supplier, financial resilience and contract exit/continuity terms.
• The regulatory regime: The Ofgem safety net ensures domestic supply continuity and account-credit protection. For business audiences, the lesson is to check whether the supplier’s contract and guarantee cover business supply scenarios in the event of failure.

Lessons and take-aways

• Supplier due diligence matters: Even smaller suppliers can collapse. When contracting with an energy supplier (for business premises, multi-sites, etc.), assess their viability, hedging approach, margins and exposure to wholesale cost shocks.
• Contract safeguards: Ensure the supply contract includes robust exit and continuity clauses: what happens if the supplier ceases trading, how quickly supply transfers, what costs apply, whether credit balances are protected, etc.
• Credit balances and continuity: Domestic customers of Colorado Energy were protected under SoLR (credit balances honoured, supply continued). For business customers, verify whether equivalent protection exists in your contract.
• Switching timing caution: If a supplier shows signs of distress, immediate switching may lead to transitional risk. Business customers should plan for scenario where supplier fails, ensure meter readings, contract assignments and contingency supply arrangements.
• Market volatility preparedness: The collapse of Colorado Energy occurred in the context of rapidly rising wholesale energy prices in 2021. Businesses might incorporate supplier failure risk into their energy-supply strategy: e.g., supplier diversification, supply contract length, fixed vs variable tariff risk, and termination/exit terms.
• Regulatory awareness: Ofgem’s role in appointing new suppliers after a failure is a key back-stop for domestic customers. Businesses should understand both domestic safety nets and their implications (or lack thereof) for non-domestic supply contracts.

Summary

The collapse of Colorado Energy, while modest in customer numbers compared to some other UK supplier failures, is important for a business-audience because it reinforces the structural risk in the retail energy market: volatile wholesale costs, regulated price caps, small margins, and supplier failure are real threats. For businesses contracting energy supply (directly or via intermediaries), this case emphasises the need for robust supplier assessment, contract clarity, continuity planning and awareness of potential supplier risk.