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

doodling

Hi,

QrizB said:

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.

Effectively those reasonabke costs would include the difference between the cost of the energy and the cost to the consumer.

A savvy supplier would be looking at potential future increased costs through increased industry levies and adding them as well since there is no point in being paid your costs only to have the money extracted back from you later.

Ultimately the money will come out of taxation, there is nowhere else for it to come from if the price cap remains.

QrizB

doodling said:

Hi,

QrizB said:

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.

Effectively those reasonabke costs would include the difference between the cost of the energy and the cost to the consumer.

A savvy supplier would be looking at potential future increased costs through increased industry levies and adding them as well since there is no point in being paid your costs only to have the money extracted back from you later.

Ultimately the money will come out of taxation, there is nowhere else for it to come from if the price cap remains.

Alas I expect it will come from a levy on consumers (you and me) and be factored in to next April's price cap.

[Deleted User]

The government will just go to their computer and press print on more money. It's about all they've been good at since March 2020. 
The cap won't be raised again. 

mnbvcxz

Optimistically Europe might have a mild breezy winter and things will settle down... 

[Deleted User]

doodling said:

Hi,

QrizB said:

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.

Effectively those reasonabke costs would include the difference between the cost of the energy and the cost to the consumer.

A savvy supplier would be looking at potential future increased costs through increased industry levies and adding them as well since there is no point in being paid your costs only to have the money extracted back from you later.

Ultimately the money will come out of taxation, there is nowhere else for it to come from if the price cap remains.

There is a certain irony here in that Ofgem used its powers in 2020 to direct Bulb to become a SoLR:

https://www.ofgem.gov.uk/sites/default/files/docs/2020/04/direction_to_appoint_bulb_energy_ltd_as_gas_supplier_of_last_resort.pdf

brewerdave

QrizB said:

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.

Just musing about this further - what are reasonable costs ?? if a large supplier is forced to absorb say 1.7million accounts at the cap level ,then they could be looking at a cost of ££billions potentially over the next two cap cycles. 

jimjames

brewerdave said: 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 !!

Other governments maybe no U turn but this one has form for it so I certainly wouldn't rule it out. It did make me laugh seeing a chap interviewed saying he liked Boris Johnson because he made hard decisions. He didn't mention that the decisions he made in the morning were then reversed in the afternoon.

MoJoeGo

mnbvcxz said:

Optimistically Europe might have a mild breezy winter and things will settle down... 

God I hope not, I am meant to be going skiing...

  

phillw

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.

Not if they all go bust.