Suppliers are ‘split’ over BEIS coronavirus assistance

Energy suppliers are split over what type of assistance should be offered by the government to mitigate the effects of the coronavirus pandemic, Utility Week understands.

Led by trade body Energy UK, the industry is in talks with the Department for Business, Energy and Industrial Strategy (BEIS) over government assistance to help businesses struggling to pay energy bills.

It is understood that suppliers have this week submitted evidence to BEIS about the energy usage of both domestic and small business customers, as well as the latest information on consumer debt. A response from BEIS however is not expected to materialise any time soon.

There are believed to be “two camps” over what type of intervention is needed from government, with a split between the largest and smallest suppliers on one side, and medium-sized retailers on the other.

Rather than giving some sort of debt related bailout to all suppliers, a preferred option among medium suppliers, larger and smaller retailers want something much more targeted.

It is thought they want to wait until they know what impact coronavirus has on debt for each supplier and then the government can provide tailored assistance.

Several options are thought to have been mooted already including a loan to companies, a future adjustment to the price cap and extending existing customer support schemes.

Reports of a split chime with comments from Scottish Power chief Keith Anderson, who told the Financial Times that it was “very early days” and that the energy sector needed to assess the full scale of the problem before making “knee jerk” calls for bailouts.

“We need to wait and see what is happening, wait and see what comes through the system, wait and see how customers react,” Anderson said.

There have been concerns raised recently over any assistance from the government being seen as “free cash” to help prop up struggling energy suppliers.

Writing in a recent blog post Octopus Energy chief executive Greg Jackson said he did not think giving energy suppliers money directly to mitigate coronavirus was the best approach.

“If government money goes to suppliers instead of directly to customers, those companies can choose what they want to do with it. Some will decide to help out customers, but some will spend it on other things”, he said.

He added that his company had proposed to the government that money should go directly to the consumer and that everyone should be helped in the same way. Jackson added that support for his idea had been received by Centrica-owned British Gas, as well as Bulb and Utility Warehouse.

Meanwhile speaking to Utility Week in an interview Juliet Davenport, chief executive of Good Energy, said there was a risk of funds being misused.

“There will be some businesses that were not doing well already and coronavirus is just giving them an opportunity to get some free cash. That’s probably a little bit harsh but I would say there would be some unscrupulous businesses out there definitely”, she said.