The boss of Scottish Power has warned that at least 20 UK energy suppliers are likely to close next month as a result of rising gas prices.
Keith Anderson told sky News That the financial pressure on suppliers was now so great that there was a “real risk” that only five or six energy companies could survive.
He called for an energy price cap, which sets a limit on what suppliers can charge retail customers, as it has hurt dozens of suppliers.
Energy regulator Offgame last fixed the price cap level in August, which came into effect from October 1. Since then, energy prices have risen at an unprecedented rate, with suppliers charging their customers less than if they bought gas in the wholesale market.
Mr Anderson is also calling for a special tariff for vulnerable customers, including those with fuel shortages.
“They are the ones who really really need financial support. For those of us who can afford, we should pay a little more because we must pay the actual cost of the gas that we use and that we supply. Is performed. “
Ofgem turns customers of failed suppliers into a new provider, but there are growing fears that the “supplier of last resort” (SOLR) process could collapse under stress.
Never before has it been tested to such an extent, more than 2 million families have either gone through or are currently undergoing SOLR.
Mr Anderson said it cost suppliers around £1,000 for each customer through this process. Those costs are then recovered through levies placed on customers’ energy bills across the UK.
“It’s going to put tremendous pressure on the bills,” said Mr. Anderson.
If a supplier cannot be found to take on the failed firms’ customers, the offgame also has a special process through which a team of external administrators is brought in to run the company until a new supplier is found. Would have got
Fourteen suppliers have gone out of business since August, with their customers being taken over by big companies such as British Gas, E.One and oil giant Shell, which recently moved into the retail electricity business.
Scottish Power has faced customers under the SOLR process so far this year, although it has done so in previous years. When suppliers take on new customers, they must demonstrate that they have purchased enough electricity to supply them.
Prices are currently so high and are not projected to be low enough for several months, it has become costly for suppliers.
Several factors have combined to cause gas prices to rise to record levels in recent weeks. Demand surged as the world emerged from lockdowns after an unusually cold winter last year, leaving stocks lower.
Gas demand has also been high in Asia, with Europe competing for supply. Meanwhile, Russia, Europe’s biggest supplier of gas, has been accused of deliberately curtailing production in order to exercise its political power.
The UK is more dependent on gas for energy supply than other European countries and got rid of a major storage facility in 2017. This means the UK is able to draw less on stored gas at times of high prices and is therefore exposed to volatility. in market value.
Credit: www.independent.co.uk /