Take-up of the government’s pandemic corporate finance measures has been very limited amongst suppliers, Energy UK has revealed.
Giving evidence to the department for business, energy and industrial strategy’s select committee hearing yesterday (4 June) into the impact of coronavirus on businesses and workers, interim chief executive Audrey Gallacher outlined the findings of a survey of member companies.
Energy UK had received feedback from 27 suppliers for its survey, she said: “Twelve have been rejected, one had got CIBLs (the Coronavirus Business Interruption Loan Scheme) and the rest were thinking about it, didn’t need it or were not sure if they were eligible.”
Gallacher said companies had seen a “big spike” in non-payments and direct debit cancellations during the early stage of the lockdown.
Suppliers also faced “real challenges” accessing support, due to the low or negative margin and asset light nature of many businesses, which also face “huge” working capital requirements.
The combination of these factors mean that “alternative mechanisms” must be looked at to support the industry, she said: “We would love to give everyone a payment holiday, but energy suppliers are not making a profit and are on the hook for policy costs. We will have to have a candid discussion about how to help people.
“Anyone who thinks there is money down the back of the couch, there’s not. We need to get to grips with that.”
Gillian Cooper, interim head of energy policy at Citizens Advice, warned that problems for vulnerable customers are likely to intensify as job losses mount in the wake of pandemic.
“The next stage of the crisis is going to be long and difficult, people will have built up debts during this period. We need to make progress on a joined up support offer because it’s going to be very challenging for households.
Jonathan Brearley, Ofgem chief executive, said that the industry would have to ensure that it maintains public trust as it works out how to respond to the looming hardships faced by many households.
“We will see large number of customers in financial distress and it is incumbent on industry to treat those costs with compassion,” he said, adding that the regulator is coming forward with proposals in next six weeks to help customers who need support to prevent them from self-disconnecting their energy supplies.
But while there had been “frantic conversations” at the beginning of the lockdown, Brearley played down concerns about the risk of mass bankruptcies in the industry .“We are not seeing a systemic problem across the sector and not seeing what we first feared.”
Fintan Slye, the director of the National Grid’s System Operator assured the MPs that security of supply next winter is not threatened by disruption to planned maintenance work.
He said that the system operator has been working with generators to ensure that maintenance is carried out in a co-ordinated way.
“We’re not seeing any indications of concern about reliability during the winter or a significant number of outages being pushed into the winter.
“We will be able to maintain levels of reliability and security of supply.”
Gallacher will suppliers face big challenges carrying out planned maintenance programmes, but said exemptions secured by the industry from the travellers’ quarantine scheme means that it will not affect such work.