Privatised Energy Companies to be bailed out by Taxpayers

[John52]

From The FT;

 

'The cost of failed regulation in the energy market is mounting.

Keeping Bulb’s customers supplied with gas and electricity this winter will require a £1.7bn loan from the government to cover the defunct company’s working capital until April. That’s more than £1,000 for each of its 1.7m households, or about £60 per UK home.

That isn’t the end of it, of course, for UK consumers. Bulb was too large to be handled by the supplier of last resort system that has cleared up over 20 failures since August by parcelling off customers to stronger suppliers. The cost there could be north of £2bn, reckons Martin Young at Investec, which will partly be passed on to bill payers via the industry levy.

This is policy failure on a vast scale, whereby the risk taken through flimsy, supplier-in-a-box business models ends up with consumers and the taxpayer. But those simply blaming the energy price cap have got it wrong.

The mistake was capping retail prices while allowing companies chasing growth at any cost to take huge amounts of commodity price risk that was in effect backstopped by the state. Recent moves in power prices would have probably meant some failures under most regimes, reckons Peter Atherton, a sector consultant. But the politics of energy mean ultimately “the government is the supplier of last resort — always has been, always will be”, he said'