‘Risky’ pubs and restaurants shunned by energy market
Pubs and restaurants are being frozen out of the energy market as suppliers turn away risky customers during the coronavirus pandemic.
Some energy suppliers have started refusing to take on new business customers from the hospitality industry amid concerns they will be unable to pay their bills due to the lockdown which has forced them to close.
British Gas and other suppliers have introduced more severe credit checks, making it harder for businesses to switch supplier to a potentially cheaper deal.
Chris Shaw, chief executive of Utility Bidder, a switching site for business energy customers, said: “In normal market conditions we could be helping save businesses money, but we can’t as they don’t have the ability to switch.”
Suppliers’ decision to pick and choose the stronger companies is likely to prove controversial at a time of extreme economic stress across the UK.
They have promised the Government that they will help domestic customers who cannot pay their bills by potentially pausing payments, but the agreement does not include business customers or criteria for new ones.
The energy industry is also in talks with the Government about financial support amid alarm over business customers not paying bills because they are starved of income during the crisis.
Businesses have themselves been financially supported with grants and loans, but access to loans has been slow and many do not meet the criteria.
Mr Shaw said that, as well as suppliers refusing pubs and restaurants, many had also hiked the price of their long-term energy tariffs.
He added: “There have always been some suppliers that would not look at pubs and restaurants.
Without switching there is no pressure to increase choice on pricing.”
British Gas’s specialist supplier for small businesses, British Gas Lite, is among the brands understood to have raised the threshold credit score required for a company to join.
One business owner who said they were unable to switch due to the changing of thresholds commented: “The Government is pumping in money to help from one side and the energy companies are picking it up at the other end.”
Despite the concern for businesses unable to change supplier, there is recognition that energy companies are also under strain.
An energy industry source said: “Energy suppliers are seeing a big increase in non-payment of bills and cancelled direct debits and will be having to make careful decisions when taking on new customers.”
Daily Telegraph
Musk applies to boost grid’s battery life
Tesla is preparing to build a new British energy business through which it could control thousands of batteries in people’s homes to help National Grid to keep the lights on.
The electric vehicle and battery technology group run by the billionaire entrepreneur Elon Musk applied last week to Ofgem, the energy regulator, for an electricity generation licence.
Tesla has declined to comment on its plans but has indicated that the move is linked to a technology platform it has created called Autobidder.
This enables it to control thousands of small household battery packs that charge from sources such as solar panels, aggregating and trading their power so that together they form a “virtual power plant” that can provide meaningful amounts of electricity to National Grid.
Although batteries do not actually generate power — rather storing electricity generated elsewhere and then discharging it — companies that want to trade power from batteries are still required by Ofgem to obtain an electricity generation licence.
The licence, if granted, could also enable Tesla to build and trade power from large industrial-scale battery storage projects.
The Times
UK household energy bills to soar by £32 per month
British households’ energy bills are set to rise by a third, with an average increase of £32 per month, as consumers use more energy while confined to their homes.
During the nationwide shutdown, usage of home appliances including dishwashers, washing machines, ovens, televisions and lighting has soared, according to new research from the price comparison site comparethemarket.com.
The website found that almost three-quarters (72%) of the 2,000 consumers they surveyed reported increased energy use during the lockdown, with almost half of people (48%) saying more members of the household were working from home.
The extra usage could lead to a 37% rise in energy bills, according to the price comparison site, which it calculates would push up household bills by £32.31 per month on average, or £387 over a year.
If households continue to work from home over a longer period of time, the website estimates the average annual cost of a combined gas and electricity bill could rise from around £1,034 to £1,421.
Higher energy bills were a concern for almost half of those surveyed (44%), who worry that working from home could lead to unaffordable bills.
Consumers are currently saving money usually spent on eating out and travel, said Peter Earl, head of energy at comparethemarket.com, but increased time indoors will lead to greater energy usage.
“Many are understandably worried about how they will manage this increased cost, particularly if they are a high energy consumption household,” he said.
Around a third of households (36%) say that they are turning down their central heating during the day, and over a quarter (27%) are limiting how much lighting they use.
The price comparison site recommends consumers contact their energy provider or consider switching supplier to find a better deal.
As many as 15m UK households are on their suppliers’ least-competitive standard variable tariff, according to energy regulator Ofgem, which costs on average £362 per year more than the cheapest fixed tariffs available on the market.
Ofgem’s latest price cap for households on standard variable tariffs, which is designed to guarantee a fair price for energy customers, was lowered on 1 April, and will remain in place for six months.
However, the latest price cap was calculated before recent falls in wholesale energy prices to 10-year lows.
The Guardian
‘My green energy plan to spark the economy back to life’
Adair Turner, the economist who became chairman of the City regulator days after Lehman Brothers collapsed, wrote a book based on his ringside seat when the 2008 banking crisis went nuclear.
Just over a decade later, the man once tipped to run the Bank of England is writing a script he believes will speed up our recovery from the current crisis.
He says the world is facing a ‘very nasty shock’ to the economy that will be ‘just as bad’ – if not worse than 2008. One obvious difference, he says, is that this time the contagion has delivered a harder blow to the Chinese economy, which bounced back rapidly from the 2008 slump.
Digging out the latest growth forecast from the World Economic Outlook, Lord Turner says its forecast of 3 per cent global economic contraction this year ‘could be a bit optimistic’.
‘We do not yet know how badly the pandemic will spread in the developing world,’ he adds. So what is his masterplan to rejuvenate the world economy this time around? Believe it or not, green energy.
The City veteran, who was head of the CBI in the late 1990s, is now chairman of the Energy Transitions Commission, a major international think tank.
He reveals that in the coming days, the global coalition – whose members include Shell, BP and Heathrow – will send a policy paper to governments in China, Europe and the UK that will set out how to use the recovery from coronavirus to ‘speed progress’ towards net-zero carbon emissions across sectors from aviation and shipping to chemicals and cement.
With the oil price at record lows, Lord Turner concedes that fossil fuels ‘are suddenly going to look cheap’ as travel resumes – potentially making a switch to cleaner energy less attractive.
But he is adamant that investment in green fuel would create jobs and give Britain’s post-coronavirus economy a much-needed boost. For instance, a jobs cull in North Sea oil could be offset by transferring workers with marine engineering skills to building bases for offshore windfarms, he says.
‘North-west Europe is blessed with huge amounts of offshore wind potential, and both the UK and the rest of Europe should be planning for massive offshore wind developments in the North Sea that can give us green electricity at a low price,’ he says. ‘It’s a huge strategic opportunity.’
Turner, a crossbench peer known as ‘Red Adair’ during his time running the CBI business trade body due to his Left-leaning views, raised eyebrows in the City when he remarked in 2009 that parts of banking are ‘socially useless’.
Today, firms in big fossil fuel guzzling industries such as aviation have supplanted banks as the pantomime villains of corporate Britain.
Lord Turner is calling on the Government to speed up airlines’ drive to net-zero carbon emissions by supporting an emerging market for sustainable jet fuel through ‘a careful balance of price incentives and regulation’.
Like officials in Brussels, Lord Turner believes a ‘kerosene tax’ could encourage airlines to switch to green fuel. Another possibility is introducing regulation for a fuel duty mandate to make airlines run, for example, 10 per cent of their fleet on sustainable fuel by 2030.
Meanwhile, any airline that receives state support to survive the crisis should be given ‘more stretching’ climate change goals.
When pressed on whether the Government should bail out struggling companies, rather than letting some firms fail, it’s the first time his smooth theorising is rattled.
‘I’m not getting into the specifics of individual companies,’ he says testily. ‘But any company that receives a bailout should have green targets attached.’
Mail on Sunday
Energy firms will have to pay £30 compensation for switching mistakes
Energy companies that make mistakes or cause delays when switching you will have to pay you £30 in compensation from today (1 May).
Under new rules from energy regulator Ofgem, customers will receive an automatic £30 payment from energy suppliers if they are switched by mistake, if their switch takes longer than 15 working days, or if their final bill doesn’t arrive within six weeks.
Ofgem consulted on the updated compensation scheme at the end of last year, but the measures only came into force today.
The changes are the latest in a series of updates to compensation rules designed to penalise suppliers that make switching mistakes.
The last raft of regulations came in on May 1, 2019, and introduced lots of other £30 compensation payments for different errors.
For instance, Ofgem introduced penalties for suppliers failing to alert a customer who has been switched accidentally or failing to resolve a mistaken switch within 20 days.
The rules also added a fine for anyone who was accidentally switched where switching back to the original supplier took more than 21 days.
All of the compensation offered under today’s rules and last year’s is automatic, and if your insurer doesn’t pay what you’re entitled to within ten days of a breach occurring, you get another £30 for the delay.
Ofgem consulted on the updated compensation scheme at the end of last year, but the measures only came into force today.
The changes are the latest in a series of updates to compensation rules designed to penalise suppliers that make switching mistakes.
The last raft of regulations came in on May 1, 2019, and introduced lots of other £30 compensation payments for different errors.
For instance, Ofgem introduced penalties for suppliers failing to alert a customer who has been switched accidentally or failing to resolve a mistaken switch within 20 days.
The rules also added a fine for anyone who was accidentally switched where switching back to the original supplier took more than 21 days.
All of the compensation offered under today’s rules and last year’s is automatic, and if your insurer doesn’t pay what you’re entitled to within ten days of a breach occurring, you get another £30 for the delay.
If lots of mistakes are made and the company fails to pay up on time for each one, you could end up being paid hundreds of pounds.
Since the regulations were introduced last year, customers have already received £700,000 in payments.
Of these payments, 27 per cent have been for mistaken switches, while 73 per cent have been for late credit balance refunds.
Mary Starks, executive director for Consumers and Markets at Ofgem, said: “More customers are switching than ever, with a record 6.4 million changing supplier in 2019.
“But we also know that a minority can still experience problems when they switch.
“As part of our commitment to protecting consumers and enabling competition, we are introducing these new standards to give customers further peace of mind, and to challenge suppliers to get it right first time.”
The Sun
Pandemic crisis offers glimpse into oil industry’s future
John Browne, the former chief executive of BP, has witnessed first hand the ups and downs of the oil industry for more than five decades. But unlike the usual market cycles of boom and bust he believes the coronavirus-linked price crash will serve as a warning for the industry of what is to come.
The pandemic has wiped out almost a third of global oil demand through lockdowns and travel bans, landing a direct hit on a sector already in the grip of its own crisis: how to evolve when climate change has risen up the political agenda, and oil demand is threatening to peak?
The timing of oil’s crash is being viewed by some as a trailer for a summer blockbuster — a faster, flashier version of the main movie, if oil demand really does top out in the next 10 to 15 years. In the past month oilfields have been shut down, storage tanks have filled up in record time and national oil companies even briefly embarked on a price war to try and win a bigger slice of a shrinking market. US prices turned temporarily negative for the first time in history in April, so depressed was demand.
Some in the industry argue that behavioural changes during the coronavirus outbreak will accelerate the peak demand trajectory.
“We’re seeing just how fragile the world is in this pandemic, and awareness of fragility is a very important thing in shaping human behaviour,” Lord Browne says. “People who have spent months worrying about their lungs are more likely to want clean air.”
As oil executives take stock after one of the most disruptive periods in the industry’s history, many are reflecting on how the pandemic will reshape its outlook beyond the need to weather a drop in prices to around $25 a barrel.
On one side stand executives like Lord Browne, who now chairs LetterOne, part owner of independent oil and gas producer Wintershall DEA, as well as sitting on the board of a biomedical institution researching potential vaccines for Covid-19. They believe the world will be changed so indelibly that oil demand will struggle to regain the upwards trajectory that has underpinned the industry for over a century. They see the potential for demand to peak earlier than expected, with a more rapid shift into renewable energy.
For the industry that means growing pressure to adapt their core fossil fuel businesses even sooner.
On the other side of the argument are those who think that efforts to mitigate climate change risk being derailed by cheap oil and a global depression that will suck up so much government time and stimulus money that climate efforts will be pushed aside. In this scenario, investment in the oil industry could fall so much that supply shortages eventually emerge, spiking prices higher.
“We’re right at the beginning ,” Lord Browne says. “But a health crisis changes people’s attitudes significantly and that will roll up to the oil industry.”
Read the full article (subscription required) here
FT Weekend
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.