British Gas hits back with low-cost rival of its own
The owner of British Gas is preparing to launch a new cut-price brand as it battles to revive its fortunes.
Centrica has struck a deal to use a low-cost IT platform to run a digital-only “challenger” brand to try to win back customers who have deserted Britain’s biggest energy supplier and moved to cheap start-ups.
The energy group, which has just been demoted from the FTSE 100 index of Britain’s biggest publicly quoted companies, is expected to give more details alongside its half-year results in July. This month it announced plans to cut 5,000 jobs, about a fifth of its workforce, as part of a restructuring ordered by Chris O’Shea, 46, its new chief executive.
The new brand’s name is yet to be decided, although Centrica has been running a trial of the concept via a little-publicised new company called “British Gas X”, which gained its own supply licence earlier in the year. This is operating using software from Ensek, a Nottingham-based group, which will be used for the new brand.
British Gas supplies about seven million households, down from a peak of about ten million a decade ago, when Centrica — which also has interests in power generation and oil and gas — still ranked as a FTSE 30 company.
Centrica, which reported adjusting operating profits of £900 million last year, has been battling problems including two oil price crashes, but it has been hit hardest in its core British Gas business. This has faced competition from cheap, efficient new entrants, while a government price cap has limited the tariffs that it can charge customers who do not switch.
Under Mr O’Shea’s plan, this “premium” British Gas energy and services offering will be run as one business unit by Matthew Bateman, who previously has run its services business. A separate business unit operating the new no-frills digital-only energy supply offering will be run by Peter Simon, a former Barclays executive who has run Centrica’s smart home business since last year. Both men are due to report directly to Mr O’Shea.
The Times
Ofgem lets energy suppliers start chasing unpaid bills
Energy suppliers have been given the green light to start collecting money owed by customers by the industry watchdog.
In a letter to suppliers, Ofgem said that while many customers were still struggling to pay bills because of the crisis, it understood that firms could not halt debt collection indefinitely.
“We recognise that suppliers cannot extend unlimited credit to customers and we anticipate suppliers will begin to restart debt management activities that may have been paused during the immediate crisis,” the regulator said.
But in a warning to suppliers, Ofgem said any debt management practices had to take into account customers’ circumstances and ability to pay.
“We will not tolerate sharp practice or aggressive debt collection,” the regulator warned in its letter, adding that suppliers may face action this was the case.
Ofgem has moved to protect vulnerable customers as coronavirus ravaged the economy and raised the risk of some consumers having gas and electricity cut off.
As the unemployment rate soared in April, the energy regulator told firms it did “not expect suppliers to be disconnecting domestic customers because of debt”.
Many energy suppliers had voluntarily stopped collecting debts as they braced for a wave of late payments from customers unable to pay their utility bills.
Energy companies typically employ a wide range of debt collection tactics, including hiring specialist debt recovery firms and bailiffs.
Industry sources say that suppliers have suspended much of this activity as the Government tells firms to give their customers breathing space. Many are offering customers payment holidays and debt plans based on their individual needs.
“Now, more than ever, it is also important that suppliers highlight the support available to their customers, ensure they are signposting to third-party advice and support where appropriate, as well as signposting to tariffs that may better meet a customer’s needs and circumstances,” Ofgem added in its letter.
Daily Telegraph
EDF explores plans for new nuclear reactor in Cumbria
EDF is exploring plans to help develop a new nuclear reactor in Cumbria.
The French state-owned utility has met with local officials keen to revive the area’s nuclear industry after Toshiba ditched plans to build a reactor in Moorside in late 2018.
It is believed EDF’s interest in the area would be as part of a consortium rather than as lead developer. Rolls-Royce is also interested in developing small modular reactors there.
Rebecca Weston, chair of Cumbria LEP’s Clean Energy Sector Panel, told the Cumbria Crack website: “I am really pleased that we now have two major companies expressing serious interest in siting new nuclear developments in Cumbria.
“This demonstrates our credentials as a premier site for clean energy generation. The UK is committed to net zero carbon and Cumbria has an important role in supporting the achievement of this.”
Daily Telegraph
“Fracking is over,” the energy minister Kwasi Kwarteng has declared in comments likely to crush lingering hopes energy firms may have harboured that the UK could still build a shale gas industry on its shores.
Speaking to BBC’s North West Tonight programme, Mr Kwarteng said the debate over fracking “has moved on” in the UK, with the Government now focused on expanding cleaner sources of energy.
“We had a moratorium on fracking last year, and frankly the debate has moved on,” Mr Kwarteng said. “It’s not something that we are looking to do. We have always said that we would be evidence-backed, so if there was a time when the scientific evidence changed our mind we would be open to that. But for now, fracking is over.”
Fracking, or hydraulic fracturing, describes the process of drilling into the earth and injecting high-pressure water and chemicals into the fissure to release trapped oil and gas.
Prime Minister Boris Johnson once referred to fracking as “glorious news for humanity”. “We must stop pussy-footing around, and get fracking,” he wrote in a 2013 article for The Sun newspaper while he was Mayor of London. Then-Prime Minister David Cameron was equally enthusiastic, urging the public to “get behind fracking” in the same year.
But building a fracking industry from scratch in the UK proved to be a task fraught with obstacles, not least a public increasingly resistant to the idea. Poll after poll suggested the more the public learned about fracking, the more fiercely they opposed it.
Claire Stephenson, from anti-fracking campaign group Frack Free Lancashire, was among hundreds who campaigned for years against fracking in their communities.
She said the experience has left permanent scars on her community, including its relationship with the police who frequently arrested and prosecuted protestors. “Everything our community has been put through, I don’t think those feelings will ever go away,” she told i.
There remain fears pressure from US companies or backbench MPs could still force fracking back on the political agenda. Meanwhile some say it never left – in Surrey techniques similar to fracking are being used now to extract oil and gas.
But for Ms Stephenson at least, the battle is over. “It feels like we have been vindicated,” she said. “I think it’s over.”
iNews
Boris Johnson is facing a backbench rebellion after blocking a tidal power scheme while sanctioning Chinese involvement in the UK’s nuclear power programme.
A group of 25 Tory MPs, led by former Ministers Paul Maynard and Iain Duncan Smith, are lobbying Business Secretary Alok Sharma to override officials who are preventing a proposed £1.3 billion tidal lagoon in Swansea Bay from going ahead.
Mr Duncan Smith said the green energy plan was the sort of ‘shovel ready’ project which could boost the economy in the wake of the coronavirus epidemic. Work could begin within months on the lagoon, which would provide enough power for 155,000 homes.
The company behind the project, Tidal Power plc, was granted a five-year consent order by the Government to start the project in 2015, but that permission is due to run out at the end of this month.
The issue was raised during a heated Zoom conference call last week between Mr Duncan Smith and Welsh Office Minister David Davies, during which Mr Davies argued that the project did not offer value for money for taxpayers.
The MPs say that if the project paved the way for six tidal lagoons around the UK, it would create more than 70,000 jobs. They accuse the Civil Service establishment of wrecking the plan.
One supporter of the lagoon said: ‘This is an opportunity to invest in British industrial expertise, British long-term jobs and Britain’s green future rather than rely on Chinese or French investment.
‘Alok’s officials say that it doesn’t offer good value for money, but those calculations are flawed and outdated. Besides, when the Government is spending hundreds of billions to protect and kickstart the economy amid the worst crisis for generations, conventional value assessments should no longer hold.’
But a senior Government source said: ‘This is just Duncan Smith sticking his nose into something he doesn’t understand.’
Mail on Sunday
National Grid challenges Trump over rules that favour petrol over electric cars
National Grid is gearing up for a battle with President Trump’s administration over vehicle emissions rules that give a boost to petrol cars over electric ones.
The FTSE 100 company is among several large utilities challenging new rules that weaken emissions standards set by the Obama administration and remove the ability of California and other states to set their own emissions rules.
National Grid runs Britain’s main gas and power grids but about half of its business is in the US, where it runs networks stretching across New York, Massachusetts and Rhode Island.
It has teamed up with the Power Companies Climate Coalition – which includes Exelon and Con Edison – to challenge the new rules. In court filings in the US, they argue that preventing individual states from setting their own regulations on vehicle emissions would “cause substantial economic and environmental harm to the power companies and the millions of customers they serve”.
They continue: “The power companies are making significant infrastructure investments to support vehicle electrification and are working to establish rate structures and programs to maximise the benefits and minimise the costs associated with integrating electric vehicle load to the grid.”
For example, they note, National Grid has worked to install charging infrastructure in Massachusetts, Rhode Island and New York and is trying to improve the take-up of electric cars.
“By preventing California and other states from mandating that automakers deploy electric vehicles in the numbers and on the schedule needed to realise the full benefits of the foregoing investments and commitments, the challenged actions injure the power companies,” they say, in a court filing earlier this year as part of the ongoing case.
Daily Telegraph
Electric cars ‘to super-charge economy’
The switch to electric vehicles could deliver a £24 billion boost to the economy over the next five years, according to government-backed research.
The Advanced Propulsion Centre said that there were huge opportunities for British companies as the country accelerates the move away from petrol and diesel cars, which are due to be banned from sale by 2035 at the latest.
The centre is a joint venture between the government and the automotive industry. Founded in 2013, it promotes research, development and production of low-carbon transport. It awards funding to projects to help to develop technologies for use in the shift to net zero-emissions vehicles.
In a report, it said that it had identified £12 billion of “market growth opportunities” in batteries. It said that there was a £10 billion growth opportunity in “power electronics”, or the way in which the electrics within a vehicle are controlled, and £2 billion in “electric machines”, that is the conversion of electrical motors into mechanical energy to propel a car.
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.