Although the whole of Europe has been suffering a brutal rise in electricity prices for two months, the most affected country is the United Kingdom, where more than 20 companies in the sector have already gone bankrupt. And the CEO of the distributor Centrica has already calculated the figure that will cost ordinary citizens: 100 pounds (about 119 euros) per invoice.
The cause is simple: the costs incurred by the two million customers whose distributors have been forced to close. All these families have been sent to another electric company, which has to take care of the reconnection and the additional cost of bringing the energy to them. One more problem if one takes into account that the regulated market has a maximum annual payment cap, which in these months is lower than the wholesale cost of supplying that electricity. The result is that families in the free market will have to pay more to make up for those losses, or else the list of bankrupt companies will only grow.
Centrica CEO Chris O’Shea warned that “there is a systemic risk in terms of participation in the retail energy market,” in a session of the Industry and Regulation Committee in the House of Lords. The law encourages small distributors to enter the market, which encourages competition in good times, but leaves them at the mercy of wholesale costs. And that, together with the annual limit imposed by the Government, leaves them very exposed to a price crisis like the current one.
“If the situation continues to deteriorate and more companies fail, the cost could end up reaching 200 pounds per invoice,” he warned.
For O’Shea, regulators must ensure that providers have adequate capital, are able to manage price risks and can protect customer deposits. And he called for “more responsibility for those suppliers that have already closed,” requesting that managers that the bankrupt companies be investigated.
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