High energy prices: wave of bankruptcies among British utilities

As of: October 8th, 2021 2:43 p.m.

Gas prices are also rising rapidly in Great Britain. This doesn’t just affect consumers. A number of utility companies have already gone bankrupt.

By Imke Koehler, ARD-Studio London

Cooking and heating suddenly cost significantly more. The Briton Carol Lowe therefore tries to use as little energy as possible. “I only turn the heat on for half an hour in the morning to keep the cold away and half an hour in the evening,” she says. “The rest of the time I try to keep myself warm as much as possible.”

Another British woman tells the BBC that she will not retire next spring after all. Given the sharp rise in energy prices, her pension is not enough.

Great Britain, like Germany and other countries, is suffering from skyrocketing gas prices. The wholesale price of natural gas has risen by around 440 percent since January because the global economy is picking up again as the corona pandemic subsides, but the supply of gas is significantly lower than the demand.

Wave of bankruptcies among gas suppliers

In Great Britain, the development has led to a wave of bankruptcies among gas suppliers. There are always new reports of bankruptcies. Ten gas utilities have gone bankrupt in the past few weeks, and more bankruptcies are expected.

As the “Times” reports, the history of the bankruptcy wave in 2015 began when six large energy suppliers shared 90 percent of the market. In order to ensure more competition, the energy ministry recommended that consumers switch providers. Comparison portals on which cheap providers could place themselves prominently were booming on the Internet.

Attractive market for young companies

The regulatory authority Ofgem stipulated that customers would be passed on to a larger gas supplier in the event of bankruptcy. This made the market attractive to young entrepreneurs: it was easy to set up a company, the risk low, and the market appeared lucrative. In the end, according to the “Times”, gas supply companies were founded at the kitchen table and customers were lured with low tariffs.

These providers are now going bankrupt. Customers will continue to receive supplies, but will have to pay significantly more for gas in the future. The additional cost can run to hundreds of pounds per year.

Government wants to reduce reliance on gas

In view of the situation, the UK government feels that it has to reduce its dependence on gas and switch to renewable energies. “These current problems, which we have with the great uncertainty in the gas market, show why we have to vigorously pursue our climate goals,” says Minister of Economic Affairs Kwasi Kwarteng.

The British are also currently paying more at the petrol pump. The reason seems to be similar to that of gas: the global economy is picking up again. According to auto insurer RAC, the average price for a full tank is currently £ 12 more than last September. The insurance company emphasizes that this has nothing to do with the lack of truck drivers and the reduced supply of petrol stations. Rather, this is due to the oil price, which rose by ten percent in September alone.

Nevertheless: there are also crisis winners. The “Sun” reported a few days ago about a petrol station in London that offered a liter of petrol for just under three pounds, and there too the fuel was sold out after a short time.

Reasons and consequences of rising energy prices in the UK

Imke Köhler, ARD London, October 8th, 2021 9:00 a.m.

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