Energy support program cash flow potentially at risk as more suppliers could go bankrupt, warns Chris O’Shea, CEO of Centrica | Economic news

Other energy suppliers could go bankrupt this winter, taking government payments to customers with them, the chief executive of British Gas owner Centrica has warned.

Chris O’Shea told Sky News that the UK energy The market, regulated by Ofgem, offers the “wealthy people” behind some retail providers a “free bet” to speculate, with other bill payers bearing the price of failure.

More than 30 retailers suppliers collapsed in the past 18 months as a result of skyrocketing gasoline pricesand he said some remaining suppliers could technically trade while insolvent this winter.

He also warned that government energy supportpaid in advance to suppliers, could be vulnerable in the event of a collapse, adding to the cost of failure shared by bill payers.

“The retail energy market has been in deficit for a number of years and therefore there are a number of energy suppliers who are in a precarious financial situation and it is only getting worse every day,” he said. he declared.

“Every day they make more losses, they find themselves in a worse position, the risk of failure increases. And I really fear that we will not see more failures.

“We have learned a lot from some of the new entrants to the market, some of them have introduced good practices, but overall they are owned by wealthy people who have free bets.

“If it goes well, they’ll make even more money than they have today. And if it goes badly, our customers have to bear the cost – that can’t be fair.”

The government has stepped in to support businesses and households with a ceiling on the maximum price for gas and electric units, reimbursing suppliers for the difference between this and the actual energy cost.

Customer deposits at risk

Mr O’Shea said the decision to pay suppliers up front meant money was at risk in the event of a collapse, along with customer deposits.

“The government gives [the payments] in advance and this increases the risk. If that supplier goes bankrupt and took that money from the government before giving it to consumers, that will only increase the cost of failure.”

Mr O’Shea was speaking at the Easington gas terminal in Humberside as Centrica began pulling gas from the Rough offshore storage facility for the first time since it reopened in October in an attempt to improve energy resilience from the United Kingdom.

The current overcast weather has cut solar and wind energy production in recent days, increasing the price and demand for gas and prompting a call from the national grid to increase supply.

“Rough is working exactly as it should, which is bringing that gas from the offshore storage facility, putting it into the system, which means we can make sure that we are the gas-fired power plants that run on gas to people’s homes, and we’re keeping prices low for consumers,” O’Shea said.

“If it wasn’t there today, we would have had to look for other sources of gas, or we would have had to look for ways to reduce electricity consumption. But certainly, the place would have grown by simply saving of supply and demand.. If the demand is increasing and the supply is not increasing, then the prices are going up. So that keeps the prices down, but it also means that we don’t have to look elsewhere .

British Gas said the ad was filmed ahead of the third wave of COVID and industry action

Rough is currently only using 20 per cent of capacity, but to increase its needs, a £1bn investment Centrica says is building on reaching a deal with the government to secure a return, and l he company would like to convert the storage field to contain hydrogen, thus doubling the investment required.

Exceptional Tax Concerns

Mr O’Shea said Centrica was committed to the UK, but warned that the recent windfall tax increase was jeopardizing oil and gas developments and could discourage foreign investment.

“A windfall tax doesn’t really create the right environment for investment in the UK, so I’m concerned about the potential long-term impacts on investment.

“I definitely think what’s happening is that for companies that might have marginal projects that roughly made economic sense before a windfall tax, those projects probably won’t be helped by a windfall tax, and so there are several projects that may not come about because of that.”

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