U.K. Suppliers Fail; Greece Sounds Alarm: Energy Update
Power Crunch Exposes U.K. Retail Vulnerability: Energy Update
(Bloomberg) -- Two more U.K. energy suppliers collapsed under the strain of surging energy costs, increasing the number of households caught up in the failures to 1.5 million, as Business Secretary Kwasi Kwarteng said the country should be prepared for higher prices in the longer term.
In the European Union, several members are calling for energy to be discussed at next month’s leaders’ summit, as talks on Wednesday that were meant to be about the transition to clean energy were hijacked by the crisis. The EU needs to intensify its power-saving efforts and expand use of renewable energy, Energy Commissioner Kadri Simson said.
Europe is facing a gas shortage after a long and bitter winter left storage sites depleted. Refilling them this summer hasn’t been easy, with top supplier Russia curbing flows to the continent.
Key Developments
- U.K. energy suppliers Green and Avro collapse
- Kwarteng fails to rule out a windfall tax on those who have made money from the crisis
- Several EU states ask for the energy crisis to be put on the agenda for the next leaders’ summit
- Gazprom and Shell discuss gas market situation
- U.S. Energy Secretary flags possible “manipulation”
- Two OPEC members say the impact of the gas crisis is likely to seep into the oil market
- Greece suggested creating an EU-funded mechanism to hedge against increases in carbon prices
- Quicktake: Why U.K. Gas Suppliers Are Going Bust, and Who Pays
U.K.’s Kwarteng Meeting Daily With Regulator to Monitor Power Market (6:49pm U.K.)
U.K. Business Secretary Kwasi Kwarteng said he’s holding daily meetings with energy regulator Ofgem to monitor the energy market.
Meetings aimed to plan and “step into gear processes to protect consumers,” Kwarteng says in tweet.
Greece Seeks EU Carbon Hedging Mechanism to Limit Price Jumps (6:42 pm U.K)
The Greek government suggested creating a European Union-funded mechanism that could use revenue from extra sales of carbon permits to limit the impact of soaring energy costs on consumers and companies.
Carbon prices more than doubled over the past two years, surging to a record earlier this month as the EU tightens its climate policy, a contributing factor in the surge in natural gas and power prices.
Greek Energy Minister Kostas Skrekas said Wednesday the idea was shared with his European counterparts.
EU States Hope to Protect Consumers Amid Gas Price Surge: Ryan (6:31pm U.K)
EU members are weighing “short term” measures to protect consumers from surging gas prices as winter approaches, Irish environment minister Eamon Ryan said.
“We’re looking at specific short term and temporary measures that will shield our European consumers from some of the worst price increases,” Ryan said in a Bloomberg TV interview after a meeting of EU energy ministers in Slovenia. “It won’t be easy,” he added.
Europe Gas Outages: Troll Works End Early (5:05pm U.K)
Maintenance at the massive Troll field in Norway ended on Wednesday, two days earlier than initially planned, according to grid operator Gassco. Works are also scheduled to end by Thursday at the Kristin field and Karsto plant.
EU Looking at Options for Tackling High Prices (5:08 pm U.K.)
European Union member states have options including changes to their national value-added tax and excise duty policies to limit high energy prices in the short-term, EU Energy Commissioner Kadri Simson said during remarks in Slovenia.
The Commission will publish in the coming weeks a “toolbox” to offer guidance on how to design those immediate measures to ensure they are in line with the bloc’s laws. Several member states are looking at introducing such measures, Simson said. The EU needs more renewables and energy savings, and needs to end its dependence on fossil fuels, according to Simson.
An integrated EU energy market is the most cost effective way to ensure secure and affordable energy supplies for EU citizens, she said.
U.K. Wind Power Generation Hits Highest Level in Over a Month (4:37 pm U.K.)
U.K. wind power generation climbed to the highest level in more than a month on Wednesday, easing the country’s reliance on expensive natural gas.
What Happens to Customers Hit by the Collapse? (4:10 pm U.K.)
Regulator Ofgem will find a new supplier for customers of the failed companies, with the move carried out automatically.
Outstanding credit balances of customers will be protected and tariffs from a new energy supplier will also be limited by a price cap.
“Under our safety net we’ll make sure your energy supplies continue,” Neil Lawrence, director of retail at Ofgem, said in a statement.
U.K. Energy Supplier Collapse Now Affects 1.5 Million Households (3:50 pm U.K.)
More than 1.5 million households in Britain are being forced to switch energy supplier after two more retailers collapsed on Wednesday, bringing the tally of companies going out of business to seven since early August.
The last two victims were Green Supplier Ltd. and Avro Energy Inc, which both collapsed on Wednesday. Avro had 580,000 customers and Green had 255,000, accounting for 2.9% of households in Britain.
Two Energy Firms Cease Trading (3:15 pm U.K.)
Avro Energy and Green Supplier will stop trading, the U.K.’s energy regulator Ofgem said in a statement.
Together the suppliers represent a share of 2.9% of domestic market.
U.K. Energy Retailer Collapses (2:22 pm U.K.)
Newcastle-based Green, a supplier of energy to 250,000 U.K. customers, went out of business on Wednesday as power and gas prices surged, the company said in an emailed statement.
“The current market conditions are unprecedented, with record wholesale energy prices pushing the cost of energy above the price cap,” the company said. “This means that Green, like all other energy suppliers, are selling energy to customers at a loss.”
Green said it had failed after the government decided not to support small energy suppliers.
U.S. Energy Secretary Flags Manipulation (1:30 pm U.K.)
U.S. Energy Secretary Jennifer Granholm said that surging gas prices in Europe had raised serious concerns and questions on the reliability of supply in the region. Speaking in Poland, she said that America and the EU had to be prepared to stand up when energy-producing nations are “manipulating supply to benefit themselves,” including through hoarding or a deliberate reduction in supply. She said the U.S. would work hard with European partners to ensure there was enough gas in this Winter.
Kwarteng Fails to Rule Out Windfall Tax (12:30pm U.K.)
Kwarteng failed to rule out a windfall tax against those who have made a “lot of money out of the current gas crisis” when asked to do so by a fellow Tory lawmaker.
“I’m not a fan of windfall taxes, OK, let me just get that straight,” he said. “But of course it’s an entire system and we have to think about how we can get the energy system as a whole to help itself.”
EU Members Seek to Add Crisis to October Summit Agenda (12:15pm U.K.)
Several EU countries want the energy crunch to be put on the agenda for the summit of the bloc’s leaders on Oct. 21-22, according to an official of the European Commission who declined to be named on confidential talks. Member states who pushed for this at a meeting on Tuesday included Italy, Spain, Poland and Hungary, the official said.
The commission, the EU’s executive arm, will announce later on Wednesday after a meeting of energy ministers that it is preparing an overview of measures that member states can take to tackle the energy crunch, the official said.
U.K. Suppliers Won’t Dwindle to 10, Says Kwarteng (12:11pm U.K.)
Kwarteng doesn’t expect the current crisis among retail energy suppliers to cause the market to contract to 10 suppliers, a number he said had been speculated about in the media.
“A wholesale collapse or exiting the market of that nature would severely reduce competition and that’s not what I’m anticipating,” Kwarteng said. “I’d be very surprised if we got to that figure.”
He said it likely won’t be necessary to go beyond existing measures to reallocate customers from failed suppliers, but that contingency plans are being prepared.
Supply Diversity to Shield U.K. From Russian Shocks: Kwarteng (12:01pm U.K.)
U.K.’s energy strategy will protect it from Russia’s ability to control the supply of gas, Kwarteng said.
“The way to be resilient generally, regardless of what Russia does is to have diversity of supply,” he added. That “will protect us against any shocks to the system which may deliberately be orchestrated by Mr. Putin’s regime.”
U.K. Weighing All Options to Fix Crisis: Kwarteng (11:43am U.K.)
Kwarteng said the country is looking at all options to address a crisis that has pushed energy suppliers to the brink of collapse amid a surge in gas prices. While those prices would normally decline, Kwarteng said people need to prepared that this time could be different.
“We have to prepare for longer term higher prices,” he said in remarks to the House of Commons Business, Energy and Industrial Strategy Committee.
Gas Crisis to Push Oil Demand, Prices Higher (11:14am)
The impact of the gas crisis is likely to seep into the oil market, driving demand and prices higher, two of OPEC’s key members said. Crude could rise by $10 a barrel over the next three-to-six months as consumers are forced to shift from gas to other fuels, Mele Kyari, managing director of Nigerian National Petroleum Corp., said in an interview with Bloomberg Television.
Iraq warned on higher oil demand, and stands ready to pump more crude if the increase in consumption warrants it. “There is some new concern,” Oil Minister Ihsan Abdul Jabbar said in Dubai, where he’s attending Gastech, a conference for the gas and hydrogen industries. “If there is agreement within OPEC, we will be ready.”
Power Crisis Hijacks EU Green Deal Talks (10:59am U.K.)
The spike in power and natural gas prices hijacked a debate about the European Green Deal at a meeting of energy ministers in Slovenia on Wednesday, according to a person with knowledge of the talks.
Ministers raised the issues of price volatility and the impact of soaring energy costs on public support for the clean shift. Some were concerned about the social consequences of the EU proposal to extend the region’s carbon market to fossil fuels used in transport and buildings, said the person, who declined to be identified because the meeting is private.
Ofgem Expects ‘Lessons Learned’ After Crisis (10:51am U.K.)
“We are going to have a lessons learned after this,” Jonathan Brearley, chief executive officer at U.K. energy regulator Ofgem, told a parliamentary committee. He added that the situation changed very quickly in August and that all companies are currently feeling the strain of higher prices.
U.K. Crisis Exposes Retail Vulnerability: Energy UK (10:48am London)
The power crisis in the U.K. has exposed the vulnerability of the country’s retail power sector, said Emma Pinchbeck, chief executive of Energy UK, the trade association for the energy industry.
“There are features in our market design that make it very difficult for our retailers to adapt to the current situation,” she said at a Parliament hearing. “The real worry is the sector is so fragile as a whole. Players that might be expected to pick up customers are worried about doing so because of the cost of doing it.”
“We think good, well-run companies will fail,” she added. “That is function of both the price shock and market design.”
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