The escalating pressures in the energy retail market were widely covered across all the national newspapers this weekend as Kwasi Kwarteng held a series of emergency meetings with the industry and Ofgem.
According to the Financial Times, suppliers are requesting a multibillion-pound emergency support package from the government to help them survive the crisis sparked by high gas prices, including the creation of a “bad bank” to absorb potentially unprofitable customers from failing rivals.
The paper quotes Boris Johnson as saying the energy challenges were “temporary” and making a commitment that the government would “do whatever we can” to support the struggling sector and keep the public supplied.
People familiar with the weekend talks told the FT the largest energy suppliers are asking the government for substantial support to handle potentially millions of customers from failing companies and may require the creation of a “Northern Rock-style bad bank” to house customers they could not take on without losing money.
Kwarteng is said to be examining the proposals and has accepted that significant intervention may be necessary, fearing the existing contingency plans may not be sufficient. Allies said he was looking at “Plans C, D and others”.
“We need a lot of contingency plans in place,” said one ally of the business secretary.
However, the Guardian says it understands the government would rather put in place arrangements to protect the millions of homes that may be left without a supplier this winter than prop up poorly financed companies that are likely to fail.
One senior industry source told the paper the government was “not interested in bailing out badly run companies” and may leave the sector to experience a “natural response” to the unfolding crisis.
There was widespread speculation of more energy retailers going to the wall this week, with the BBC reporting that four are expected to go bust this week.
Industry sources told the BBC that four firms have asked larger players to bid to take over the supply to one million customers.
The boss of Green told the Guardian his firm is among those small suppliers facing the threat of going bust.
“I don’t think we’ll survive the winter if there’s not a material change,” said Peter McGirr, the chief executive at the startup, which was founded in 2019 and boasts over 250,000 customers and 185 employees.
McGirr said the crisis talks held this weekend by the business secretary, Kwasi Kwarteng, had failed to include the smaller suppliers that are most vulnerable to the energy market shock and said his company’s calls for help from the industry regulator had “fallen on deaf ears”.
The Financial Times was the first paper to report that Bulb had asked its main bankers to help find new sources of funding.
The paper said the start-up, which supplies electricity and gas to 1.7m UK customers, is being advised by longstanding bankers Lazard as it explores its options.
Those options include raising new funds from investors as well as talking to other suppliers about a potential joint venture or merger, these people said. In those approaches, Bulb has been highlighting the quality and size of its database of customers.
One potential new backer approached about funding Bulb said it would be difficult given the current environment.
SSE says no decision to break up group, backs low-carbon strategy
SSE has not taken any decision to break up the group, the power producer said on Monday, in response to a report that it was close to a split following pressure from activist investor Elliott.
“The Board remains fully focused on strategic choices which will drive shareholder value from the wealth of net zero opportunities the company is creating,” the company said.
The Telegraph reported on Friday that Britain’s second-biggest energy provider is close to being split into two separate blue-chip companies.
The U.S. investor has been in talks with SSE’s board to split the company’s legacy wholesale networks business from its growth renewables operations for more than a year, the paper reported, citing sources.
Elliott was not immediately available for comment outside regular U.S. business hours.
Reuters
UK businesses ask PM for more ‘leadership’ on climate issues
Almost 100 UK businesses, including BT, Coca-Cola, Santander, Unilever, and Heathrow, have written a letter to Boris Johnson telling him he has “a limited window” to show “leadership” on climate issues.
The push by companies from across a broad range of sectors reflects frustration over climate policies to match the UK’s net zero emissions goals.
Companies such as National Grid, Tesco and the Co-op are demanding more comprehensive action ahead of the UN COP26 climate conference hosted by the UK government in Glasgow in November.
“The countdown to COP26 gives you a limited window to show such leadership,” says the letter, seen by the Financial Times.
The call came as the UK prime minister landed in New York where he and UN secretary-general António Guterres are gathering about 40 heads of state on Monday, on the sidelines of the UN General Assembly, for closed-door talks about climate goals.
The UK is due to release its Net Zero Strategy ahead of the COP26 summit but has dragged its heels on several related measures, including a long-delayed Treasury review of how to fund net zero policies.
The UK’s environment bill, which will set pollution and environmental protection rules, and its heat and buildings strategy, which will lay out how to reduce heating to net zero emissions, have both also been delayed several times.
The environment bill made its way through the House of Lords last week in a version that food groups, retailers and green groups criticised for failing to harden the terms on deforestation.
“People are slightly nervous that more guidance hasn’t come,” said Stephanie Hyde, chief executive of JLL, a real estate company, and a signatory of the letter. “The ask of the government is to give clarity, in advance of COP, on what businesses need to do.”
The delay in the heat and building strategy could have a knock-on effect on emissions, because of the long lead time associated with construction projects, she added.
The letter says the UK’s target to slash emissions to net zero by 2050 needed to be backed up by details on how to fund the transformation of the economy.
The Financial Times