Back in business: failed energy bosses
The bosses behind a string of failed suppliers that cost consumers almost £2 million are back running new energy firms.
Tim Cantle-Jones, 61, who ran the failed Future Energy as well as Northumbria Energy whose customers were bailed out by the industry lifeboat scheme, has in the past few days applied to sell electricity through his new business, Putney Energy. The rescue of these firms, which were both registered to his home address in Newcastle, left households picking up the bill for thousands of stranded customers.
Meanwhile, complaints are pouring in about Neo Energy, an energy firm run by Cantle-Jones’s former business partner Oliver Friedrich, 47, who was a senior figure at Brilliant Energy which has since failed. It held the same supply licence as Northumbria Energy, which has appointed liquidators, and Neo.
Customers of Neo complain of inaccurate bills and never being able to contact the firm. It has stopped taking on new customers. The firm made headlines when it launched, offering the first 1,000 customers free energy and also boasting of becoming the first supplier to allow customers to pay using cryptocurrency.
Friedrich was the secretary of Ure Energy, which had its supply licence revoked in 2019 after failing to pay more than £209,000 in green taxes. He says he worked for Ure only for four weeks after it had withdrawn from the energy market.
Friedrich also owns the UK Energy Incubator Hub, which was ordered in March this year to immediately provide financial information to the regulator or risk having its supply licence revoked. Ofgem, the regulator, is reviewing its response. He said that despite having a rough few months, Northumbria Energy was still running under a different company structure. “It looks forward to continuing to service its existing customer-base and offering new customers an alternative to old school monolithic utilities,” Friedrich said.
Shortly after the collapse of Brilliant Energy, Ofgem clamped down on unsuitable people launching energy businesses. Ofgem said that rules introduced in 2019 would “tighten the test we use to determine if someone is fit and proper to have a licence by asking for additional disclosures, including on insolvency involvement in previous supplier failure”.
The cost of failed energy firms so far will add about £2.6 billion to bills, about £94 per household, according to Citizens Advice. More than 30 firms have collapsed since the start of 2021. The cost of the failed firms run by Cantle-Jones and Friedrich is about £1.8 million, according to an industry analyst.
The rise in the cost of gas and electricity has exposed the fragility of Britain’s energy market. A plan by Ofgem to allow challenger firms to enter the market led to a boom in energy suppliers. The number of suppliers rose from 24 in 2014 to 70 in 2018.
The failure of each firm was passed on to customer bills through the Supplier of Last Resort scheme. This guaranteed that no customer of a failed supplier would lose money, but effectively added a tax on to bills of customers of other firms. Then when the cost of wholesale electricity and gas spiked many of the smaller suppliers who were not hedged against price rises plunged into financial trouble.
Customers of many of the start-up firms often complained of useless gimmicks and appalling customer service.
Cantle-Jones was once considered a rising star in the industry and was part of Theresa May’s prime ministerial trade delegation to Africa in the summer of 2018, and was described at the time by one business research service as “a leading figure in the UK energy industry having established successful businesses in energy supply”.
A statement from Cantle-Jones said: “Putney Energy Ltd has robust plans, which have been submitted to Ofgem, that set out its financial model and resources, customer service commitments and suitability to hold a licence.” He said that he was chief executive of Future Energy until February 2017 and remained a director until October that year. He also founded Northumbria Energy in 2013 and sold the business in September 2018, but remained a consultant for the firm until February 2019.
Ofgem said: “We have a range of regular monitoring for financial performance and customer service obligations and where standards are not met, we do not hesitate to take action.”
National Grid slashes gas shipments meant to tackle energy crisis
Critical shipments of natural gas are being turned away from British ports because National Grid fears it will be overwhelmed by supplies intended to tackle the European energy crisis.
The Grid has cut the amount of liquid natural gas it is accepting at Milford Haven terminals in Wales over fears that it is running out of storage for millions of tonnes of fossil fuel meant to replace Russian deliveries across the Continent.
It dramatically reduced the amount of capacity offered at the port in June at an auction held last Wednesday.
Energy companies expect further reductions at the country’s three LNG terminals in the coming months, even as oil and gas-rich countries offer to ramp up supplies.
Iran is considering gas exports to Europe, an oil minister said on Sunday.
The Grid’s limits on imports have sparked a backlash from global energy companies including ExxonMobil, RWE and Petronas, which have warned that it risks making the cost-of-living crisis worse by driving up energy prices.
It is also feared that lower supplies will undermine efforts in Whitehall to make Britain an LNG gateway for the whole of Europe.
The Grid has consulted energy companies on the policy of accepting less gas. ExxonMobil policy adviser Chris Wright said: “There is a risk that the reduction in supply to the market could result in upward pressure on wholesale prices which could ultimately feed through to end consumers.
“The very fact that this change proposal has been raised risks significantly undermining efforts to deliver LNG to the UK market, and for onward transmission to wider European markets, at this time when LNG has never been in greater demand.”
Terminal operator South Hook Gas said in its consultation response that negotiations over one LNG shipment had ended due to National Grid’s changes, and that another shipper was trying to cancel their summer deliveries.
Read the fully article on The Telegraph
Tories will be told to vote down oil and gas windfall tax
Tory MPs will be ordered to vote against a windfall tax on oil and gas firms on Tuesday, the Business Secretary has said as he criticised the proposal being considered by the Treasury.
Kwasi Kwarteng called the windfall tax a “bad idea” and warned that it would undercut the Government’s attempt to create more jobs by deterring investment from those companies.
The remarks will be seen as a shot across the bows of Rishi Sunak, the Chancellor, who has said he may implement the tax if not enough investment is made.
Labour has been calling for a windfall tax on oil and gas companies and will attempt to amend the Queen’s Speech to force the spotlight onto the issue.
The move will mean Tory MPs will be forced to decide whether to support the policy change, oppose it or abstain – a tricky position given the government’s mixed messages on it.
Mr Kwarteng said MPs would be told to vote down the measure, arguing that governments always reject amendments to the Queen’s Speech, their legislative agenda.
But in a round of broadcast interviews, the Business Secretary also made it clear that he was personally opposed to a windfall tax, which could raise billions of pounds.
Mr Kwarteng told the BBC’s Sunday Morning programme: “I don’t believe in windfall taxes because what you are taxing is investment in jobs, you are taxing investment in wealth creation, you’re taxing investment in new technologies such as hydrogen and carbon capture.
“We want to see more investment. We don’t want to see taxes which essentially act against any incentive to invest.”
Ed Miliband, Labour’s shadow climate change and net zero strategy secretary, predicted that the Treasury would eventually bring in a windfall tax.
He told Sky News: “We face a social emergency in this country. Seven million people, we know, are skipping meals because they can’t afford their bills, and energy bills are rocketing upwards.
“At the same time, as a direct result of that, we have got oil and gas companies that are making billions of pounds, literally record profits.
“My message to the Chancellor is this – you’re going to do a windfall tax. I believe he is going to do a windfall tax because, frankly, it’s an unanswerable case. Get on with it and do it, and bring real help to families.”
Kwasi Kwarteng seeks US investment for UK nuclear plants to end reliance on China
The Business Secretary is to fly to the US this week to drum up American investment in new nuclear plants amid concerns that the UK is too reliant on China for help building reactors in Britain.
Kwasi Kwarteng is expected to hold talks with Jennifer Granholm, the US energy secretary, in Washington DC, where a Whitehall source said the minister was “keen to strengthen cooperation with the Americans on energy security”.
Last month Boris Johnson and Mr Kwarteng announced plans for a massive expansion of nuclear energy in Britain as part of the country’s new energy security strategy that followed Vladimir Putin’s invasion of Ukraine.
Mr Kwarteng is said to be concerned that Britain has become too reliant on two major players in the nuclear market – China General Nuclear, a Chinese state-owned energy giant, and EDF, which is owned by the French state.
Tory MPs have warned ministers to avoid embedding Chinese state-owned companies within the UK’s critical national infrastructure.
Mr Kwarteng and Ms Granholm are also expected to discuss the possibility of the US unloading more liquid natural gas at British terminals to be exported to Europe through two gas interconnectors, as part of plans to reduce the EU’s reliance on energy from Russia.
Ministers are hoping to raise more than £10 billion in private capital to fund the new Sizewell C nuclear power station in Suffolk. The Government is expected to take a 20 per cent equity stake in the project, with a further 20 per cent for EDF and the final 60 per cent coming from private investors.
Watchdog urged to step in as UK’s poorest turn off energy supply
A food bank charity has called for the energy watchdog to intervene after a spate of reports of penniless families self-disconnecting from their gas and electricity, leaving them unable to wash clothes, use cookers or even switch on lights.
Feeding Britain said people on low incomes who used prepayment energy meters were increasingly being pushed into destitution by rising costs, punitive debt collection rules and disproportionately high standing charges.
Cases it has brought to the attention of Ofgem include a single mum who disconnected her heating and electric because she could not meet a combined debt of £15, and a man who self-disconnected after running up an £8.75 debt.
It called the recent energy cost increases the “worst financial crisis in the lifetimes of the all too many people on low incomes” and urged Ofgem, the energy regulator, to upgrade its support package for the poorest consumers.
The charity said it was concerned by the “intertwined issues of debt, standing charges, and self-disconnection” incurred by people on prepayment meters, who paid higher charges for energy despite having the lowest incomes.
It has compiled for Ofgem a list of examples of energy bill-related problems encountered by people on prepayment meters who have approached its members for help with food parcels, and increasingly with fuel vouchers.
These include the requirement that standing charges and debts are paid off before supply starts up, meaning that even adding a £30 fuel voucher’s worth of credit to a prepayment account is in some cases not enough to enable the customer to switch on lights, fridge and cooker.
It has also highlighted onerous standing charges paid by prepayment meter customers, which can amount to 80p a day in some cases. The charges stack up, even when a customer is away or disconnects, creating problems for when they subsequently attempt to switch energy supplies back on.
“We have been appalled to learn of people having to throw away food or, due to their hunger, storing and eating it in hazardous ways (and becoming ill) after disconnecting their fridge and freezer at home. People in this group are also unable to afford the hot water they need to wash themselves and their clothes as often as they need,” the letter said.
Fears government plan to clean up UK’s rivers ‘too little too late’ as sewage discharges continue
Campaigners have claimed the government’s plans to tackles sewage being pumped into rivers in the South West are ‘too little, too late’.
Water companies are allowed to use an overflow network of 3,000 storm drains during periods of heavy rain to prevent flooding and stop sewage from backing up into people’s homes.
Tens of thousands of sewage discharges happen each year, but the government’s plan aims to reduce that number by 70% by 2035 – eliminating them completely at some of the UK’s most important protected sites.
A six-week consultation to look at the government’s Storm Overflows Discharge Reduction Plan ended on Thursday 12 May.
But campaigners the government’s plan it is too little too late, with one river in the Cotswolds has suffered from years of discharges which is slowly killing parts of it.
Schoolboy Alex Haffernan and his friends put together a video highlighting their fears for the future of the river.
“Rivers won’t be clean until I’m in my late 40s and my children are the age I am now,” he said.
“Under current targets the river would only be starting to be cleaned up by the time I’m a middle-aged man.”
He said it makes him “furious”.
His mother, Soraya Wooller, added: “I have really serious anxieties about the risk to human health from being able to enjoy the things that we love doing.
“I’m really cautious about what the impacts are in human health and where we can safely undertake these activities. I’m even worried about letting my dog swim.”
Speaking to ITV News West Country on the banks of the River Windrush in the Cotswolds, campaigner Ashley Smith said: “I cant see the bottom. It’s ridiculous.”
It comes after Thames Water discharged untreated sewage into the river for 3,664 hours on 228 separate times in 2020.
Mr Smith, who is a founding member of Windrush Against Sewage Pollution (WASP), said: “The gravel which should be golden, and was golden in my memory a few years ago, is now covered in brown algae and sediment.”
He added: “The government had an opportunity to call upon sewage companies to bring and end to dumping untreated sewage and take all reasonable steps to do so, but they rejected that and they forced that out of the legislation.
“They proposed something which just allows water companies to show improvement, and they are good at that and frankly it’s not going to make the slightest bit of improvement.”
But the cost of upgrading rivers is estimated to be anywhere between £150billion to £660billion.
Environment Minister Rebecca Pow told ITV News West Country the government is the first to set out the expectation the water companies must act to reduce the harm caused by storm overflows.
She said: “I am very clear that we will not hesitate to take action if progress is not being made.”
Scottish Water bosses received £227,000 in bonuses while raw sewage spills into rivers
Earlier this week, leader Alex Cole-Hamilton quizzed the First Minister on the routine dumping of untreated human waste after an investigation by The Ferret revealed the practice had happened more than 10,000 times in 2021.
Nicola Sturgeon said it is an “important issue” and vowed to take steps to examine what can be done
Mr Cole-Hamilton said it is time the Scottish Government sends a message that “nobody should get away with systematically pumping raw sewage into our rivers – let alone a Government-owned company”.
He said people will want to know why the total bonus paid out last year to three top bosses at the organisation amounted to £227,000 – of which £92,000 was given to the chief executive.
The party also suggested that while The Ferret identified the figure of at least 30 times a day for the releasing of sewage, the true statistic is “likely to be much higher” due to a “rarity” in monitoring.
Mr Cole-Hamilton said: “The release of untreated human waste into our rivers shouldn’t be allowed to happen.
“We’re talking about excrement, wet wipes and sanitary towels being pumped into the heart of our communities.
“People will want to know why top execs are being rewarded with enormous bonuses of up to £92,000 when raw sewage is being dumped at least 30 times a day.
“We need the Government to take action to prevent this from happening, but neither Scottish Water or the Scottish Government show any sign of changing their ways.”
A Scottish Water spokesperson said the chief executive’s package was “significantly less” than that of paid to counterparts in other UK water companies.
They stated: “Executive incentive payments are only made for exceeding performance expectations under arrangements approved by the Scottish Water Board and the Scottish Government.
“Payments made in 2021 reflected strong out-performance of the targets set for the final year of the 2015-2021 regulatory period.
“The package for the Scottish Water chief executive is significantly lower than that of other water company chief executives elsewhere in the UK water sector. Scottish Water is the fourth largest water and waste water services organisation in the UK.”
The spokesperson added: “Scottish Water is committed to continuing to support the protection and improvement of Scotland’s rivers, coastal waters and beaches.
“We recently published our urban waters route map and plans to invest up to half a billion pounds in Scotland’s waste water network to deliver further improvements and ensure the country’s rivers, beaches and urban waters are free from sewage related debris.
“This will enable us to target investment in improving our monitoring, reporting our performance, and upgrading the worst performing Combined Sewer Overflows. CSO’s play an important role as essential safety valves on the sewer network to help prevent flooding which can particularly affect customers’ properties and communities.
“All our customers can play a huge part in preventing debris in rivers and on beaches. Our new national campaign ‘Nature Calls’ urges customers not to flush wet wipes (and other items) down the toilet and we are calling for a complete ban on the sale of wet wipes containing plastic.”
Are heat pumps worth it or just a lot of hot air?
From the road there is little to differentiate the huge grey warehouse from the others on the Slough Trading Estate. Perhaps the fleet of garish vans in the car park — bright pink tentacles on a purple background — are a clue. Only upon stepping inside the vast hangar does it becomes clear this is not a usual factory.
Below the soaring corrugated ceiling sit a pair of detached houses. One, built in red brick, is a replica of a typical 1970s three-bedroom home. The second, rendered in white, is constructed in the style of a home from the early 2000s. These two houses are at the epicentre of a revolution in domestic heating.
Greg Jackson, chief executive and founder of Octopus Energy, bounds through the door of the white house. Outside — and even in the hangar — it is a chilly day. But inside this demonstration home the thermometer on the wall reads 22.5C. “It’s toasty warm,” beams Jackson, 50, sporting grey stubble and wearing a white V-neck T-shirt, blue jeans and scuffed brown shoes. “It’s almost too hot.”
These two homes represent environmentalists’ great hope for the decarbonisation of British domestic heating. They are both equipped with air-source heat pumps, devices that act like fridges in reverse, extracting warmth from the air and using it to heat radiators and water in the tank. This is a green, carbon-free way to heat the nation’s homes. As long as the electricity used to power the heat pumps is from a clean source, the only by-product is water
By comparison, a gas boiler produces carbon dioxide every time it turns on. Some 80% of the nation’s homes are heated using gas and every day 25 million boilers fire up, producing nearly a fifth of Britain’s greenhouse gas emissions. In its drive to net zero, the government has pledged to phase out the installation of all new gas boilers by 2035.
Heat pumps are environmentalists’ preferred choice to replace them. But they are not popular elsewhere. They are widely viewed as expensive, inefficient and suitable only for the most modern of houses. Only 30,000 are installed each year, compared with 1.7 million gas boilers.
And this is where Jackson comes in — to show that heat pumps are affordable and effective. “We are bringing heat pumps to the mass market,” he says. So why do they have such a bad reputation? “As a nation we have gone about this arse about tit. We have had large leaky homes doing this so far. Each of them have been bespoke jobs — and that is expensive.”
Jackson’s mission is to target properties where installing heat pumps can be done cheaply and quickly. “If you want to decarbonise Britain, then you have to go after the low-hanging fruit. And that is three or four-bed semis. If we can get heat pumps into homes built from the 1970s onwards — like these two houses we have built here — that represents 40% of British homes. You do it well, you improve your processes. And as you improve the mass-market solutions, as you bring down the costs, you get better solutions for specialist needs as well. Then you can go after the more difficult homes.”
Read the full interview in The Times
Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.