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Thursday, October 21, 2021

Great Britain – the energy crisis. Chief Ofgem’s lights went out during a committee meeting

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During the committee meeting in the British parliament, the head of the energy regulatory authority (Ofgem), Jonathan Brearley, answered the question about the risk of problems with electricity supplies. Suddenly his light went out.

The head of Ofgem appeared virtually at the committee meeting, during which the rising gas prices and the possible risk of limiting electricity supply to apartments were discussed. Shortly after MPs reassured that plans were in place to prevent supply disruptions to customers, Brearley had to stop. Moments earlier, it had gotten darker in the room from which he accessed the parliament online.

“The lights are out,” said Darren Jones, a member of the British Parliament with a laugh, and another joke about the security of electricity supply.

– They are motion sensor controlled to save energy. This is the only assurance for the committee, ‘the head of the British regulator hurriedly explained.


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Bankruptcies of energy suppliers

During the Wednesday meeting of the commission, Jonathan Brearley also referred to the issue of bankruptcies of companies in the energy market. – Please look at the changes in gas prices – this is really something that we have probably not seen at such a pace yet. We expect a large number of customers to be affected, we already see hundreds of thousands of customers feeling it, but that number could be much higher. It is very difficult for me to pinpoint the exact number, said Brearley. He warned that the increase in gas prices may not be a temporary phenomenon.

Rising wholesale gas prices led to the collapse of two more energy suppliers in the UK market on Wednesday. In recent weeks, six companies have already gone bankrupt, with a total of 1.5 million customers and approx. 5 percent. market.

The collapse of companies does not mean that electricity or gas stops flowing to customers, because they are taken over by other suppliers, but the effect of this is usually a change to a higher tariff. These are not large increases, because customers are protected against the effect of wholesale price fluctuations with top-down price ceilings. However, these caps mean that energy companies are unable to pass on higher wholesale costs to customers, forcing some – mostly smaller – companies to withdraw from the market.

Meanwhile, the increase in wholesale gas prices, which affects not only the UK but also other European countries, is unprecedented. According to the industry organization Oil & Gas UK, they have increased by 250 percent since January, and by 70 percent since the beginning of August.

The companies that fell on Wednesday – Avro Energy and Green – had 580,000, respectively. and 255 thous. customers, the former being the largest of the six suppliers that have withdrawn from the market in recent weeks. And no one doubts that others will follow in their footsteps. On Sunday, Bulb, the UK’s sixth-largest energy company, announced it was seeking a government bailout, while on Wednesday another supplier, Igloo, announced restructuring talks.

On Monday, Business Minister Kwasi Kwarteng said that there is absolutely no possibility that the UK will run out of electricity this winter. He also assured that, despite rising gas prices, the maximum price limits protecting consumers will be maintained.

According to “The Guardian”, the data for 2020 shows that 37 percent. electricity in Great Britain comes from gas.

Gas price increases – why is the raw material so expensive?

Analyst from the Energetyka24.pl portal Jakub Wiech on TVN24 mentioned the reasons for the gas price increases. – This is the aftermath of what we have on the European and world markets in terms of the supply (amount) of blue fuel. In fact, the whole world recovering from this economic slowdown during the lockdown, the pandemic began to rapidly increase its gas consumption, while the supply side, i.e. the companies producing this fuel, did not keep up with this jump. This was followed by Russia’s political actions, which limited the supply (supplies – ed.) Of gas to Europe – he said.

Among the reasons, the expert also mentioned “limited supply of energy from renewable sources”. – In the North Sea, where there are very large capacities installed in wind farms, we have a complete fleet and there is no electricity produced from offshore windmills, which prompted countries with capacities in this technology to compensate for losses by gas-fired power plants. All these factors have caused gas prices to rise to really record levels in Europe, and Polish consumers are feeling it – he said.

As for Poland, the President of the Energy Regulatory Office approved on Thursday changes in the tariff of PGNiG Obrót Detaliczny in the area of ​​gas fuel trading. The increase in the price of gas fuel in relation to the currently applicable tariff for all tariff groups is 7.4%. The changed tariff will apply from October 1 to December 31, 2021.

You can also expect higher electricity prices. – We cannot help but see reality; one has to take into account the increase in energy prices, admitted Małgorzata Kozak, the head of the market development and consumer affairs department of the Energy Regulatory Office on Tuesday.

TVN24 Biznes, Reuters, PAP

Main photo source: Reuters

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