Big Six collapse? Ofgem puts advisers on standby

oldagetraveller1

Bear in mind this is from a MSM outlet. They are all very adept at instilling fear and panic in the population over the past months!

wild666

I could see energy suppliers massively increase the cost of electric to subsidise the cost of gas. Most suppliers are now charging 20p plus per kWh for electric so putting 10p or more on a kWh of electric to cover the increase in the gas price would seriously hit user who are all electric but that is an option suppliers could consider as gas prices are in the region of 6p per kWh now and 1 unit of gas is around 11.4 kWh. I think the days of cheap energy are long gone and prices will only rise substantially in years to come.

brynhh

I didn't think "big six" was a thing any more? Aint the major/original ones British Gas, SSE, Scottish, EDF and EON? Then Bulb, Bristol, Ecotricity and probably very few others the smaller ones all slowly going pop?

GingerTim

wild666 said:

I could see energy suppliers massively increase the cost of electric to subsidise the cost of gas. Most suppliers are now charging 20p plus per kWh for electric so putting 10p or more on a kWh of electric to cover the increase in the gas price would seriously hit user who are all electric but that is an option suppliers could consider as gas prices are in the region of 6p per kWh now and 1 unit of gas is around 11.4 kWh. I think the days of cheap energy are long gone and prices will only rise substantially in years to come.

Wouldn't it be more likely that they increase the price of gas instead, since gas is used to generate electricity?

(Agreed about medium to long term costs going up)

wakeupalarm

Ofgem warns five energy suppliers over £7m renewables payments

The UK energy regulator has said it could start the process to revoke the licences of five small UK energy suppliers if they fail to pay £7 million towards its renewable scheme.

Ofgem announced on Friday ir is consulting on final orders for Ampoweruk, Whoop Energy, Goto Energy, Home Energy Trading and Colorado Energy.

sevenhills

keiran said:

I wouldn't be surprised if it's BG/Centrica

I've seen the value of my shareholding drop by 85% over the last couple of years - maybe I'll suffer a loss all the way down to 100% now .

What a dog of a share.

I am up 10% at the moment, I was hoping for more of an increase when the competition is going bust. The SSE share price looks very volatile. Long term I am hoping for a larger increase from Centrica.

The Government needs to support the energy companies, not financially, but support them so that they can flourish and compete against each other.

badmemory

keiran said:

Have to wonder how new energy entrants were vetted by Ofgem and got through the appraisal process and whether Ofgem will bear any responsibility for this debacle. 

Ofgem vetting new energy cos!!  You were joking weren't you?  It isn't as if they are actually independent.

bristolleedsfan

wild666 said:

I could see energy suppliers massively increase the cost of electric to subsidise the cost of gas. Most suppliers are now charging 20p plus per kWh for electric so putting 10p or more on a kWh of electric to cover the increase in the gas price would seriously hit user who are all electric but that is an option suppliers could consider as gas prices are in the region of 6p per kWh now and 1 unit of gas is around 11.4 kWh. I think the days of cheap energy are long gone and prices will only rise substantially in years to come.

Electricity fixes have hit/close to 30pkwh with many Gas fixed rates nearer 8pkwh than 7pkwh

tghe-retford

GingerTim said:

wild666 said:

I could see energy suppliers massively increase the cost of electric to subsidise the cost of gas. Most suppliers are now charging 20p plus per kWh for electric so putting 10p or more on a kWh of electric to cover the increase in the gas price would seriously hit user who are all electric but that is an option suppliers could consider as gas prices are in the region of 6p per kWh now and 1 unit of gas is around 11.4 kWh. I think the days of cheap energy are long gone and prices will only rise substantially in years to come.

Wouldn't it be more likely that they increase the price of gas instead, since gas is used to generate electricity?

(Agreed about medium to long term costs going up)

Sky News broke an exclusive last night by obtaining a draft of the Heat and Building Strategy that I believe was talked about here elsewhere in the last few days, but for the laymen, the document obtained suggests that gas prices will be artificially aligned with that of electric, meaning if implemented today that 6p per kWh becomes 20p+ per kWh and for some on cheaper fixed deals, a 5x or more increase on the price of gas. That would be Boris Johnson's "Poll Tax" moment and would potentially put him on a timeline of weeks to go in power as opposed to years to go should it go ahead.

But yes, I do agree that the era of cheap energy is over and we're all going to have to get used to paying a lot more for energy from a lot fewer suppliers, potentially to the point where switching only changes the name on the bill.

[Deleted User]

sevenhills said:

keiran said:

I wouldn't be surprised if it's BG/Centrica

I've seen the value of my shareholding drop by 85% over the last couple of years - maybe I'll suffer a loss all the way down to 100% now .

What a dog of a share.

The Government needs to support the energy companies, not financially, but support them so that they can flourish and compete against each other.

How exactly should the Government support energy suppliers if money is not a consideration? There are two reasons why suppliers are going bust.

One, they haven't hedged enough for their existing customer base so they are losing money each time that energy is bought to support those on cheap fixed deals. They don't hedge because in a relatively stable market it is a low risk strategy; it costs money to hedge, and by not doing so they can continue to offer cheap prices and attract customers.

Two, the wholesale price of gas has gone through the roof. A year ago today, the wholesale price was 1.132p/kWh. With extra costs etc, we were looking at 2.2p/kWh on our bills. Today, the spot price for wholesale gas is 6.179p/kWh. The good news is that it has fallen back from its 2021 high of 7.170p/kWh (that was the price YESTERDAY).

It follows that any supplier that has customers on the  Capped tariff is losing a lot of money if they have failed to hedge. SoLRs who have taken on Ks of customers will also be losing money which they will seek to recover via the SoLR payments process. The cost of all agreed SoLR claims is then added to all our future bills.

Should this situation have been foreseen? The answer is that it was, and the Government was aware of the possibility sometime ago. The problem was that, like the pandemic, it was regarded as a Black Swan event: an event that might or might not happen. The report also went to say that energy supply would not be an issue PROVIDED we were prepared to pay for it. Arguably, this bit of the report was too conservative as China, in particular, is struggling to import energy at any price. The latter is why our historic LPG gas has turned towards the East rather than toward us: China is paying more for it.

Playing around with green taxes is going to fix nothing in the short-term - neither are grand plans for more renewables and nuclear.