What are the chances of a Government U-Turn ??

brewerdave

OFGEM and various ministers say the cap will stay - but I really don't see how it can in the current disaster. For what its worth I can see an extra 15-20% being added on in a desperate attempt to keep some of the suppliers afloat beyond next week !!

QrizB

While "u-turn" could be the current Govt's motto, I don't expect them to change on this one. Increasing bills by 20% will be even more unpopular with their voters than allowing suppliers to go bust.

YoghurtCloset

I doubt they'd do a u-turn on this. However, in future we may have to pay some sort of levy added to our bills that gets put in a pot to cover future surges in energy prices. 

spot1034

The big suppliers can withstand short term losses but obviously they will try to adjust their prices in the future to make them up. 

Inigo_Montoya

its certainly not impossible the cap could rise again before April but I cant see the Government deciding to do it as they know it politically extremely damaging for them 

if the situation deteriorates further its more likely they will use yet more non existent taxpayers money to prop up the big six like they have already suggested they will do for companies taking on the customers of those suppliers going bust

From what I have read in passing some companies are saying they have bough their gas up to a year in advance so a lot depends on how "hedged up" the big six are

The companies selling the wholesale gas such as Gazprom are making a complete killing at the moment

[Deleted User]

QrizB said:

While "u-turn" could be the current Govt's motto, I don't expect them to change on this one. Increasing bills by 20% will be even more unpopular with their voters than allowing suppliers to go bust.

Increase bills now or in April?  The Ofgem accounting period which is used to calculate the April 2022 Cap has already started as Ofgem usually announces the new Cap in August and February.

Personally, I would ease the Cap a little December otherwise I sense a big voter ‘kickback’ when the April Cap kicks in alongside the increase in NI. But hey, I am not The PM and I do not have his crystal ball which suggests this gas hike is only going to be short-lived.

mongoose2009

spot1034 said:

The big suppliers can withstand short term losses but obviously they will try to adjust their prices in the future to make them up. 

no they have HEDGED properly with lots of different LONGTERM contracts on prices 

these spivs havent

spot1034

mongoose2009 said:

spot1034 said:

The big suppliers can withstand short term losses but obviously they will try to adjust their prices in the future to make them up. 

no they have HEDGED properly with lots of different LONGTERM contracts on prices 

these spivs havent

In respect of fixed contracts, that is what a responsible company would do. Here we are talking about variable tariffs which can in normal circumstances be priced to reflect the current market (which doesn't normally move upwards as wildly as has happened recently) but they are presently capped at a price well under the cost of the energy being supplied, and also possibly new customers - for whom no provision has been made - if the company is acting as SOLR to one which has ceased to trade.

[Deleted User]

Give me the name of a supplier that will have hedged enough energy to take on half a Million additional customers? I doubt that any supplier has a cupboard full of cheap energy. I suspect that Ofgem is going to have to appoint a SoLR/s. Have a read of this document and you will see that supplier failures are very expensive:

https://www.citizensadvice.org.uk/Global/CitizensAdvice/Energy/SoLR%20report%20FINAL_v2.pdf

brewerdave

[Deleted User] said:

Give me the name of a supplier that will have hedged enough energy to take on half a Million additional customers? I doubt that any supplier has a cupboard full of cheap energy. I suspect that Ofgem is going to have to appoint a SoLR/s. Have a read of this document and you will see that supplier failures are very expensive:

https://www.citizensadvice.org.uk/Global/CitizensAdvice/Energy/SoLR%20report%20FINAL_v2.pdf

Far from a legal expert, but I wonder if a large supplier could refuse to act as SOLR under the current cap? They could be sued by their own shareholders for being in breach of their fiduciary duty by taking on loss making business.

QrizB

brewerdave said:

Dolor said:

Give me the name of a supplier that will have hedged enough energy to take on half a Million additional customers? I doubt that any supplier has a cupboard full of cheap energy. I suspect that Ofgem is going to have to appoint a SoLR/s. Have a read of this document and you will see that supplier failures are very expensive:
https://www.citizensadvice.org.uk/Global/CitizensAdvice/Energy/SoLR%20report%20FINAL_v2.pdf

Far from a legal expert, but I wonder if a large supplier could refuse to act as SOLR under the current cap? They could be sued by their own shareholders for being in breach of their fiduciary duty by taking on loss making business.

Ofgem has the power to force a supplier to become SoLR. The supplier can claim reasonable costs from the relevant fund, so b eing sued by their own shareholders is unlikey unless they fail to claim costs.