Monday, May 23 2022 Sign In   |    Register

News Quick Search



Front Page
Power News
Today's News
Yesterday's News
Week of May 16
Week of May 09
Week of May 02
Week of Apr 25
Week of Apr 18
By Topic
By News Partner
Gas News
News Customization


Pro Plus(+)

Add on products to your professional subscription.
  • Energy Archive News

    Home > News > Power News > News Article

    Share by Email E-mail Printer Friendly Print

    Energy industry fears ‘bloodbath’ as 30 firms face gas price crunch

    September 20, 2021 - Oscar Williams-Grut


      The UKenergy industry is bracing for a wave of company collapses after surging natural gas prices plunged the industry into crisis.

      Four energy providers have already gone bust this month and industry sources said another four were on the brink of collapse. One insider said the sector was braced for a “bloodbath”. Analysts say as many as 30 companies could go under this winter, although a senior energy executive said they didn’t recognize that number.

      Natural gas prices have soared 70% since the start of August and 14% in just the past week. The surge has pushed UK day-ahead electricity prices to record levels.

      The Government’s energy price cap means suppliers can’t immediately raise prices to reflect the higher wholesale costs. As a result, many operators are now losing huge sums servicing customers on unprofitable deals. The problem primarily affects smaller operators, as large companies will have hedged their exposure by agreeing prices to buy electricity in advance.

      However, any collapse will send shockwaves through the wider industry. When a company fails, the Government asks remaining operators to take on their clients. Exposure to these customers won’t have been hedged, meaning each new customer will likely lose the provider money. Credit Suisse said absorbing 10% of customers in the market would cost the industry an estimated £1 billion.

      “If there is a rash of failures and other suppliers have to take on lots of customers on the regulated default tariff, that will be an expensive option for the new supplier, which will want compensation from the regulator for being the supplier of last resort,” said Henry Edwardes-Evans, an energy analyst at S&P Global Platts.

      Energy stocks fell in anticipation of rising costs. British Gas owner Centrica dropped 1.1%, National Grid fell 1.1%, and Eon fell half a percent in Germany. Shell, which operates a consumer energy brand alongside its main oil business, fell 1.3%.

      Energy companies have been holding crunch talks with the Government and regulator Ofgem over the weekend to try to agree emergency support measures. Business secretary Kwasi Kwarteng today hosts another round of talks.

      Sources said the energy industry had presented a range of possible measures, including: state-backed loans linked to new customer numbers; a financial crisis-style “bad bank” to service unprofitable customers left behind by bust companies; and a temporary halt to green levies and other policy costs. A source close to the discussions said all options were being considered.

      The Financial Times reported that challenger energy brand Bulb is seeking new funding to help weather the crisis. A spokesperson said the company was exploring “various opportunities” in light of record gas prices.

      Read More

      Boris Johnson: We will have to do everything we can to stop energy firms failing

      ‘Panic’ in energy markets sends UK electricity prices soaring

      UK energy bills set for ‘hefty price bump’ as gas prices soar


    Other Articles - International


       Home  -  Feedback  -  Contact Us  -  Safe Sender  -  About Energy Central   
    Copyright © 1996-2022 by CyberTech, Inc. All rights reserved.
    Energy Central® and Energy Central Professional® are registered trademarks of CyberTech, Incorporated. Data and information is provided for informational purposes only, and is not intended for trading purposes. CyberTech does not warrant that the information or services of Energy Central will meet any specific requirements; nor will it be error free or uninterrupted; nor shall CyberTech be liable for any indirect, incidental or consequential damages (including lost data, information or profits) sustained or incurred in connection with the use of, operation of, or inability to use Energy Central. Other terms of use may apply. Membership information is confidential and subject to our privacy agreement.