UK energy renewal
Sign up for myFT Daily Digest to get to know the UK Energy News first.
Britain’s largest energy retailer warns that suppliers may refuse to absorb failed rival customers unless the government returns to negotiate relief packages, avoiding sector intervention Insisted that there was no.
This week, business secretary Kwasi Kwaten canceled the sector deal after urgent talks to deal with the number of suppliers that collapsed due to record wholesale prices, and the industry solved the problem of isolated customers themselves. He said he had to do it.
Bill Bullen, CEO of Utilita, which has about 800,000 customers, said the amount of money needed to take on a failed supplier’s customers is so great that only the largest companies can participate. ..
“Amount of money [needed to take on those customers] It’s so big that it’s impossible to do it without any help. “
Keith Anderson, CEO of Scottish Power, the UK’s fifth-largest energy retailer, said the strongest companies were asked to take on billions of pounds of debt and risk weakening themselves in the process. Said that.
The largest companies that can charge heads of households under UK regulatory price caps are £ 1,277 starting October 1, which is the cost of providing gas and electricity to the average household at current prices. At least 500 pounds lower per year than.
“We’re not looking for relief. I don’t need these customers,” Anderson said.
“If this issue seems to target 2-4 million customers, we’re talking about £ 2bn, £ 3bn, £ 4bn, £ 5bn because there are so many suppliers out there. There is a possibility. [in uncovered wholesale energy costs].. “
Seven power companies went bankrupt in the last 6 weeks As a wholesale price Gas and electricity soar to record levels Further collapse is expected soon, and most of the current sector is in the red.
Dale Vince, founder and chief executive officer of ecotricity, a clean energy supplier, is afraid that the government is trying to take an “idealistic and free market approach” due to price caps. He said he did not recognize the distortion.
“It’s ridiculous to say that this isn’t a free market, so we need to sort it out,” he said.
“With price caps, the market is not free unless we can pass on the rising costs to our customers. The reality is, as a citizen of this country, how do we pay the record wholesale prices we face? That’s the only problem. They can’t pretend they’re not happening, “Vince said.
In today’s system, known as the “last resort supplier,” Ofgem finds an alternative business to continue servicing stranded customers if the company fails. The costs incurred by the new provider will be shared on all customer invoices.
However, energy companies are concerned that the system will be overwhelmed if they are forced to undertake too many contracts.
Some industry observers suggest that only 10 companies can survive the winter, and Kwarteng and Ofgem are below expectations, but suggest that 40 companies could go bankrupt. I am.
If too many suppliers fail at the same time, energy executives can struggle to find an alternative company that is willing to take on balance sheet strength, capabilities, or potentially millions of new customers. I warn you that there is.
One executive warned that there was a “significant risk” that some companies could reject. “Then you are in real danger,” they said, adding that “you need to plan a viable solution in case the worst happens.”
Some energy companies are claiming state-sponsored loans, allowing companies to enter the market and take on the debt owed by the Treasury to serve customers in the red.
They suggested that the solution could recover the loss from the customer’s invoice for 5-10 years instead of the short period of 1 year.
The business unit said on Friday that it still believes the existing system is “robust.” Ofgem said its “priority” was “to ensure that the cost of doing so to the wider market was kept as low as possible.”
Mr. Quarten said that if the supplier of the last resort system is “impossible”, he could appoint a “special manager” to run the business, but executives of the nationalized energy company It states that it involves an effective creation.
An energy retail executive probably bought one of the largest suppliers that failed, helped manage isolated accounts, and potentially purchased and supplied billions of pounds worth of gas and electricity. He said he needed to maintain staff and IT systems for.
“The special administration does not prevent the government from investing money,” said one executive.
Ecotricity’s Vince said it wants the government to take over the supplier so that it can experience how difficult the situation is for established providers.
“I hope the government will join the game,” Vince said. “And feel some of this pain.”
Additional report by Jim Pickard
UK energy retailers say suppliers may refuse to absorb customers
Source link UK energy retailers say suppliers may refuse to absorb customers