Summary: The CEO of Centrica, the parent company of British Gas, Chris O’Shea, has warned that UK households will face higher energy bills if suppliers cannot prevent struggling customers from going into deep debt. O’Shea acknowledged that mistakes had been made, but argued that the government needed to find a fair way to distribute the costs of support to the most vulnerable in society. The cost of bad debt currently represents about 1% of typical invoices, and Energy UK has estimated that the moratorium on forced prepayment installations is adding around £30m a month to customer debt levels nationwide, equivalent to around £1 per household per month. Meanwhile, Centrica has reopened Rough, Britain’s largest gas storage facility, but O’Shea warned at the time that it was not a “magic bullet” to solve energy security problems during the winter months, as the site could only meet 1% of the request on a cold day.
Engaging piece:
As the UK steps out of the energy crisis that saw Russia cut off gas supplies to Europe following its full-scale invasion of Ukraine, consumers are facing the aftermath of these events. British Gas has been caught up in a scandal involving third-party contractors breaking into the homes of vulnerable people to install pre-payment meters, which has resulted in an industry-wide investigation moratorium. However, the CEO of Centrica, British Gas’s parent company, has warned that UK households will face higher energy bills if suppliers cannot prevent struggling customers from going into deep debt.
Notably, the cost of bad debt currently represents about 1% of typical invoices, and Energy UK has estimated that the moratorium on forced prepayment installations is adding around £30m a month to customer debt levels nationwide, equivalent to around £1 per household per month. This is a significant concern as winter approaches, and households become more reliant on energy.
Furthermore, Centrica has reopened Rough, Britain’s largest gas storage facility, but O’Shea warned at the time that it was not a “magic bullet” to solve energy security problems during the winter months, as the site could only meet 1% of the request on a cold day. This emphasises the UK’s energy resilience issues, as the country has less than 10 days of peak winter demand.
There is also a significant concern regarding the lack of new grid connections, which is resulting in delays to investment in new power generation capacity. O’Shea urged the UK government and the regulator to ensure developers put down a large deposit to join the waiting list for new grid connections to weed out those who have “no financial substance.”
As the country faces mounting energy-related problems, the need to find a fair way to distribute the costs of supporting the most vulnerable in society is more critical than ever. O’Shea argued that the “policy costs” resulting from such a move should be funded through general taxation, rather than following the usual formula of adding them to energy bills.
—————————————————-
| Article | Link |
|---|---|
| UK Artful Impressions | Premiere Etsy Store |
| Sponsored Content | View |
| 90’s Rock Band Review | View |
| Ted Lasso’s MacBook Guide | View |
| Nature’s Secret to More Energy | View |
| Ancient Recipe for Weight Loss | View |
| MacBook Air i3 vs i5 | View |
| You Need a VPN in 2023 – Liberty Shield | View |
The chief executive of parent company British Gas has said all UK households will face higher energy bills if suppliers are unable to prevent struggling customers from going into deep debt.
Centrica chief executive Chris O’Shea’s warning follows industry-wide investigation moratorium over the forced installation of prepayment meters in February after British Gas was caught up in a scandal involving third-party contractors breaking into the homes of vulnerable people to install the devices.
In his first major interview since the scandal, O’Shea acknowledged that mistakes had been made, but argued that the government needed to find a fair way to distribute the costs of support to the most vulnerable in society.
“It’s very good to say, we’re going to stop X, Y and Z. . .[but]at the end of the day, if you have people in categories where you can’t install a prepayment meter, then the general population is paying for their energy,” he told the Financial Times.
Tuesday, Centric said in a trading update that its performance had been strong so far in 2023 thanks to “significantly stronger” profits from British Gas, although earnings per share were still expected to fall by around 30% from the previous ‘last year.
British Gas’ boost comes from a change in regulations that has allowed energy suppliers to already recoup some costs of supplying customers during the energy crisis.
Degemregulator, is considering allowing suppliers to levy other additional charges on all energy bills to cover the costs of bad debts accrued by struggling households, as part of changes to limit the installation of meters on prepayment.
“If bad debt increases because of this, Ofgem will have to increase the price [suppliers can charge]”, O’Shea said.
Energy UK, the trade group, has estimated that the moratorium on forced prepayment installations is adding around £30million a month to customer debt levels nationwide, equivalent to around £1 per household per month. The cost of bad debt currently represents about 1% of typical invoices.
O’Shea also said he remained “extremely” concerned about the country’s “energy resilience” given the lack of gas storage in the UK.
Centrica has reopened Rough, Britain’s largest gas storage facility, in October last year, after closing it to new injections five years earlier. But he warned at the time that it was not a “magic bullet” to solve energy security problems during the winter months, as the site could only meet 1% of the request on a cold day.
O’Shea was “disappointed” speaking with the government on support for further development of Rough had fallen through last year. “I’m very worried about the UK’s energy resilience,” he said. “I am very concerned about the real lack of gas storage. We have less than 10 days of peak winter demand.
The warning comes as the initial impact of the energy crisis – caused by Russia cutting off gas supplies to Europe following its full-scale invasion of Ukraine – is beginning to ease.
But with bills set to remain well above pre-war Ukraine levels for several years, the government is looking for ways to protect low-income households – such as introducing a “social tariff”.
O’Shea argued that the “policy costs” resulting from such a move should be funded through general taxation, rather than following the usual formula of adding them to energy bills.
Centrica is one of Britain’s largest energy companies, with assets ranging from North Sea oil and gas fields, an energy trading division and a 20% stake in the company that operates the Kingdom’s nuclear power stations -United.
O’Shea echoed widespread industry complaints about “real problems” getting new grid connections, which he said were delaying investment in new power generation capacity. “It’s very frustrating because it’s very easy to fix,” he said.
He urged the government and regulator to ensure developers put down a large deposit to join the waiting list for new grid connections to weed out those who have “no financial substance”.
Last week, Centrica opened its first large solar farm, an 18 megawatt project in Wiltshire, and plans to build up to 900 MW of renewable and flexible generation assets, which include gas-fired power stations, here 2026.
O’Shea said he was interested in investing in Sizewell C, the new nuclear power station on the Suffolk coast, depending on the level of risk and reward investors had to bear. The project is carried by EDFthe French public energy company, which owns the remaining 80% of the existing nuclear power plant fleet in the United Kingdom.
But he added he was ‘eternally grateful’ the company had not invested in Hinkley Point C, the nuclear power station that EDF is building in Somerset, which was assaulted by delays and cost overruns. The 3.2 GW plant is being built under a different funding model, which means investors have to wait until it starts generating before seeing any returns.
Before deciding on longer-term investment plans, however, O’Shea said he needed to spend more time on the delicate issue of the forced installation of prepayment meters. Ofgem has set a number of conditions for any provider to restart forced payment.
“It’s not imminent,” O’ Shea said. “We made mistakes on this – very public mistakes – I’d rather take the time to get it right than rush into it.”
https://www.ft.com/content/1a39462b-b1fe-4f52-8e6c-8d28b5675160
—————————————————-