Another 20 energy providers in the UK could go bust in what looks like a “massacre” in the coming months unless the government reviews the energy price cap, the chief executive of one of the largest providers said on Thursday.
More than a dozen power suppliers in the UK have exited the retail energy market in recent weeks, and more are likely to do so, as wholesale gas prices rally.
Europe’s tight gas market, low wind speeds, abnormally low gas inventories, and record carbon prices have combined in recent weeks to send benchmark gas prices and power prices in the largest economies to record highs.
The UK has a so-called Energy Price Cap in place, which protects households from too high bills by capping the price that providers can pass on to them, but which additionally burdens energy providers.
Unless the UK government intervenes and reviews for raising the price cap soon, “we are in danger of just sleepwalking into an absolute massacre”, Keith Anderson, chief executive at ScottishPower, told the Financial Times.
“We think probably in the next month at least another 20 suppliers will end up going bankrupt,” Anderson told SkyNews.
The price cap currently costs providers around $6.9 billion (£5 billion), the top executive of ScottishPower, one of the largest utilities in the UK, told SkyNews.
Last month, the head of the UK’s energy regulator said more energy suppliers were set to go bust as soaring gas prices are putting an unprecedented cost burden on smaller electricity and gas providers.
“I think what is different this time is that dramatic change in the costs that those suppliers are facing,” Jonathan Brearley, chief executive officer of Ofgem, the independent energy regulator for Great Britain, said in September.
Back then, Brearley and the UK’s Business and Energy Secretary Kwasi Kwarteng said in a joint statement that the energy price cap would remain in place.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More