Talks between the government and industry over the ongoing energy crisis are not moving fast enough, the bosses of two suppliers have told Utility Week, with Ecotricity chief executive Dale Vince accusing ministers of being “in denial” over the extent of the problem.
Following the massive rise in wholesale energy prices over the second half of last year, the government has been holding crisis talks with energy companies in a bid to alleviate pressures on them and their customers.
Speaking to Utility Week, Vince said there has been a “two-tier approach” to the talks, with ministers hosting separate meetings with around half a dozen of the largest suppliers and the market’s smaller players.
“Generally everybody is saying the same thing; the government has to do something, not just sit and accept the current situation,” said Vince.
He continued: “The price cap is killing an awful lot of companies. There’s a lack of regulation and hedging. That kind of stuff has been a factor.
“There is a concern that the government will dump this £4 billion cost of failure back on the sector, back on energy bills, which nobody wants. Generally the government is being told what’s wrong but aren’t doing anything about it.”
Vince further criticised the pace of the talks, noting that the crisis began in September and that it is now January and there is still no resolution. He said prices remain high and suppliers still left in the market are “just eating into their balance sheet with loss making trading forced on them by government policy of the price cap”.
He said the government’s determination to keep prices down “is an illusion”.
“Government is in denial about all of this, hoping presumably that the problem will ease or go away but it isn’t going to. Forward prices look set to be high for two years, the IEA came out today and said it’s going to be three years of high prices globally because of high demand for electricity. This crisis is not short term,” Vince added.
Simon Oscroft, co-founder of So Energy, agreed the talks are not proceeding fast enough.
He told Utility Week: “Ofgem is concluding a few consultations around the technicalities of the price cap but we will need real government intervention to alleviate the pain of bills near £2,000.
“We’re not moving fast enough. This crisis began in October and the government has only really started getting excited about it recently and we’re now much closer to the cap being set.”
In response a spokesperson for the Department for Business, Energy and Industrial Strategy (BEIS) said the price cap is insulating millions of consumers from high global gas prices, but added the government recognises the cost of living pressures being felt.
“We have a range of schemes in place to help mitigate higher energy prices, including increasing the Warm Home Discount to £150 per year as well as providing the Winter Fuel Payment to more than 11 million elderly customers, all as part of a wider £4.2 billion package of government measures to help ease cost of living pressures,” they added.
Last year a record 27 suppliers exited the market via the Supplier of Last Resort (SoLR) process – triple the previous record set in 2019.
Additionally one supplier, Bulb, was deemed too big to be liquidated via SoLR. It subsequently become the first ever retailer to enter the government’s special administration regime.