Energy Supplier Foresees Battlefield in British Energy Market
Over the next month, up to 20 British energy suppliers may collapse due to rising gas and electricity prices, Keith Anderson, chief executive of Scottish energy supplier ScottishPower, told Sky news channel.
That is why the British government must adjust the maximum energy prices as soon as possible so that companies can pass on their increased costs. Otherwise, it will be an “absolute battleground” in the UK energy market, Anderson said.
Ofgem, the British energy market regulator, determines the maximum level of energy prices. The next price review is scheduled for April next year, but Anderson wants it to happen sooner. He further told the Financial Times business newspaper that there is a “significant risk” that the UK energy market will soon consist of just five or six companies. According to him, these are financially sound companies but can no longer pass on the higher energy prices to customers.
ScottishPower, a subsidiary of Spanish utility Iberdrola, is one of the UK’s major energy suppliers, supplying gas and power to much of Scotland, North Wales and central England.
By the end of September, ten energy suppliers in the United Kingdom had already gone bankrupt due to high natural gas prices. The regulator has since assigned the customers of these companies other suppliers.
Prices for natural gas have risen sharply in recent times, partly due to economic recovery, creating an enormous demand for liquefied natural gas (LNG) in Asia. This has put further pressure on natural gas supplies to Europe, resulting in several European companies having already reduced production. As a result, consumers fear sky-high energy bills. As a result, tax measures are being taken in various countries, including the Netherlands, to reduce the higher costs.
Concerns are also rising in Russia about higher energy prices and their effect on the demand for gas in Europe, the main market for Russian gas. Russian President Vladimir Putin said in a televised government meeting that higher prices lead to lower consumption, affecting suppliers, including state gas company Gazprom.