Page 8 - Gi February 2022

industry & Government news

OFGEM GIVES £1.83BN TO ENERGY FIRMS THAT

TOOK ON COLLAPSED RIVALS’ CUSTOMERS

ENERGY FIRMS THAT took on
millions of customers from rivals that
collapsed amid soaring gas prices
have been granted an initial £1.83
billion compensation by the regulator
to help them absorb extra costs, reports
The Guardian.
The sum, which relates to the wave
of failures among household energy
suppliers during 2021, is likely to rise
and will ultimately be funded by anyone
who pays gas and electricity bills.
Since August, 25 suppliers have
fallen victim to surging prices, which
left them paying far more for gas but
selling it for far less because of an
energy price cap that was intended to
protect bill payers.
Regulator Ofgem arranged for healthy MORE THAN FOUR MILLION CUSTOMERS HAVE BEEN AFFECTED BY ENERGY FIRM COLLAPSES
competitors to take on the collapsed
firms’ customers via its supplier of markets but does not include other an energy supplier and household
last resort scheme, which prevents expenses such as staff and IT. These credit balances are honoured,” a
disruption to household supply. are yet to be calculated and will be spokesperson for the regulator said.
But agreeing to serve so many extra added to the total later. The final bill “This comes at a cost, which we
customers meant the suppliers of related to energy supplier collapses always seek to minimise. We’re also
last resort had to buy more energy on could rise to £2.5 billion, according to stabilising the retail market with robust
wholesale markets. They can charge that some estimates. stress tests for all suppliers.”
cost – £1.83 billion, according to Ofgem The largest single compensation The largest supplier to fail in
disclosures – to local gas and electricity payment of £681 million went to 2021 was Bulb Energy, with
distribution networks from April. Octopus Energy for taking on Avro 1.6 million customers. However,
Those grid operators, in turn, will Energy’s 580,000 customers, while the size of the company meant its
add the extra cost to what they charge British Gas was granted £361 million collapse activated a separate “special
suppliers for use of their systems. That for taking on half a million customers administration” scheme.
means the money will eventually be from several smaller firms. Shell Under this arrangement, Bulb is
added to household bills, which are Energy was awarded £362 million. being run by the global advisory firm
already expected to soar next year to “Ofgem’s safety net has protected Teneo, with Treasury funds of £1.7
reflect the wider gas price surge. more than four million customers billion set aside to fund it. This cost
The £1.83 billion approved by Ofgem through the unprecedented global gas could also end up being added to
covers buying energy on the wholesale prices this year, making sure they have household energy bills.

GAS CRISIS FUELS CALL FOR UK TO UPDATE ENERGY SECURITY POLICY

MINISTERS ARE RELYING on an as the benchmark market in the Energy Research Centre (UKERC),
outdated energy security policy, Netherlands rose to a record €127.45 a group of academics funded by
leading academics have warned, as per megawatt hour, according to ICIS the government’s UK Research and
escalating tensions between Russia data, breaking through the €116.75/ Innovation body, called for a review
and western leaders propelled the gas MWh ceiling set in October. of the country’s energy security
market to record price highs. The price spike was triggered by policy, warning ministers had been
UK gas reached a record closing price of concerns over deteriorating relations “complacent about the supply of gas
322.5 pence per therm in mid-December, with Russia, one of the largest for too long”.
according to data from market price suppliers of gas into Europe, which Government policy, last updated in
experts at ICIS, vaulting ahead of the prompted international condemnation 2017, is now out of date and homes may
previous high of just over 298p/therm set after massing 100,000 troops on the face further volatility in the future, the
in early October this year. Ukrainian border. UKERC cautioned, saying the gas crisis
A record was also set in Europe, The market surge came as the UK was “not just for Christmas”.

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