Weekend press: Bulb administrators to appoint Lazard to find buyer

In our latest round-up of sector coverage across national media, Bulb’s administrators are said to be preparing to appoint advisors to find an exit from special administration. There is also coverage of the fallout of energy price hikes, as well as the less dramatic increases to water bills. Meanwhile, customers hit by power cuts in recent storms are increasingly considering generating their own electricity.

Bulb Energy administrators prepare to appoint Lazard to find buyer

Administrators of Bulb Energy, the UK energy supplier bailed out by taxpayers last year, are preparing to appoint Lazard to handle the sale of the business, according to three people familiar with the situation.

Bulb was placed into “special administration” in November after regulators deemed it too large to process via the energy industry’s normal mechanism for distributing the customers of failed suppliers to rival companies.

The group was Britain’s seventh-biggest supplier, with 1.5mn customers, and had to admit to regulators last year that it was no longer able to withstand record wholesale gas and power prices.

The company was the first in the energy industry to be placed into special administration and its working capital is being supported by a £1.7bn government loan. The process is being run by Teneo.

Lazard was set to be called back in partly because it was familiar with Bulb’s business, one of the people said.

The investment bank last year sought to find Bulb new investors and to sell it to a rival but the process came to nothing as wholesale gas prices, in particular, continued to surge. At least 27 UK energy providers have collapsed since the start of August.

Lazard will now seek to rekindle interest in the business. Rivals including Centrica, Ovo Energy and Octopus all ran the rule over Bulb during last year’s sales process.

Those efforts to find a buyer were abandoned in November after potential bidders indicated they were no longer willing to invest in or acquire the company “on a solvent basis”, according to documents sent to creditors in January.

Teneo told creditors in January that a sale or rescue of the company “might not be possible until spring 2022”, although industry experts said this was optimistic given current conditions in the energy retail market.

The Financial Times

Households face big bills for green upgrades

Britons are going to have to spend upwards of £100 billion improving their homes if they are to meet the government’s energy efficiency regulations, analysts have estimated.

After sifting through the publicly available energy performance certificates (EPCs) of 15 million homes, a team of research analysts at the investment bank RBC calculated that 60 per cent of the nation’s housing stock was graded below a level C. The actual figure could be even higher, given that EPCs were introduced only in 2007, meaning that many older houses still do not have a rating.

Property owners will have to confront this problem in the coming years and the required investment is expected to push up rents and inflate mortgage debt. By 2028 all buy-to-let properties will need to have at least a C rating and owner-occupiers have until 2035 to get their homes up to standard.

On average RBC estimates that it will cost owner-occupiers £9,400 to upgrade their homes so that they reach a C rating. The cost for landlords is likely to be slightly lower at £7,700, given that rental properties generally already have higher ratings.

The analysts estimate that cheaper mortgages will be available on homes with higher EPC ratings and they will be likely to knock more than £250 off annual energy bills.

Houses with a C rating or better are likely to be worth more as well. RBC estimates that a house with a C rating will be worth 5 per cent more than a similar property with a D rating.

Finding the best part of £10,000 for new windows, doors, insulation or solar panels will prove difficult for many, especially if inflation continues to eat into household budgets.

Because of this, RBC expects that the banks will benefit as the country moves to upgrade its housing stock.

The analysts think that many will turn to the banks to fund the work, choosing to add the extra spend on their mortgages, something that the banks are likely to be encouraged to do by the government.

The Times

EU draws up contingencies in case Ukraine crisis hits energy supplies

Brussels is examining how to shield consumers from a potential energy crisis as part of plans to protect Europe’s households, businesses and borders from the fallout from a Russian military escalation in Ukraine.

Diplomats have told the Financial Times that the EU is discussing contingency measures to deal with risks from surging gas prices, a possible migratory crisis and cyber security threats if Russia invades Ukraine.

The priority of the EU’s emergency planning is to cope with any reduction in gas flows from Russia, which as Europe’s largest supplier accounts for about 40 per cent of imports.

World leaders will on Monday meet on both sides of the Atlantic to seek a diplomatic solution to de-escalate the crisis with Russia. Emmanuel Macron will meet Vladimir Putin face-to-face in Moscow after three phone calls in the past 10 days. The president of France plans to tell his Russian counterpart that while the security of Ukraine cannot be compromised, he understands that Moscow has concerns of its own.

At the same time, Olaf Scholz has flown to Washington to meet Joe Biden for the first time since becoming Germany’s chancellor in December. He intends to present a united front with the US president following accusations that Berlin had become a weak link in the west’s resistance against Russia’s build-up of more than 100,000 troops on Ukraine’s border.

European Commission president Ursula von der Leyen told the Financial Times in an interview on Friday that the EU needed to be prepared for “any scenario” with Russia and Ukraine — part of which was to do everything it could to find alternative energy sources.

“You would never trust a gas supplier that is not reliable,” she said. “This scenario would be very difficult for the EU, but the same goes for Russia with its one-dimensional economy. In such a situation we would also do everything to alleviate the pressure on households and consumers.”

The Financial Times

Storms fuel generator scramble as trust in energy supply falls

Ferocious storms that left tens of thousands of people without electricity are fuelling demand for generators to power homes and businesses amid claims that energy companies “can’t be trusted to keep the lights on”.

Sales were “extremely busy” in Aberdeenshire after Storm Arwen in November, which left more than 100,000 homes in the dark, a generator supplier has said. Two storms in quick succession last weekend further raised demand. One resident in Aberdeenshire said there was now a shortage of generators as residents took measures to prevent going days without power in the event of another outage.

Kenny Anderson, who lives in a remote part of west Aberdeenshire, said he had suffered 11 “grim” days without hot water or heating; six following Storm Arwen and five in the aftermath of Storms Malik and Corrie, which hit Scotland last Saturday and Sunday.

More than 100,000 customers were left without electricity after wind speeds reached more than 90mph in parts of the country.

“We’re contemplating spending £6,500 on a generator,” Anderson said. “It’s grim because there’s no hot water, no heating, you can’t have showers. You’ve got to use a head torch to cook.”

Anderson said he had lost all confidence in Scottish and Southern Electricity Networks (SSEN), the company responsible for providing power to 3.7 million homes in central southern England and northern Scotland.

He accused them of issuing frequent but inaccurate updates — having first been told his home would be back on grid by Saturday night he was not reconnected until Wednesday. “To be honest, they’ve got the communication skills of a single-cell sponge,” he said.

A spokesman for SSEN said: “In addition to paying enhanced levels of compensation to over 33,000 customers, we said we would consider reasonable out-of-pocket expenses such as food and accommodation. The funding of generators unfortunately does not meet this criteria.”

A spokesman for Just Generators, a large UK supplier, said it had noticed a big uptake in demand in the northeast of Scotland. “Particularly in November, it was extremely busy and even into December we were still supplying generators up to the Aberdeen area,” he said. “Normally when there’s a storm, it gets cleared up within a few days. For people to be without power for a week plus is quite unusual. So people were getting a bit desperate.”

The Times

British Gas leaves thousands of homes in the cold after it failed to fix boilers

British Gas has been forced to apologise to hundreds of thousands of customers over its failure to fix and service broken boilers this winter.

The energy giant promised to improve its customer service after facing criticism for its new policy of allowing staff to work from home several days a week.

Customers have been left without heating and hot water as a cold snap approaches this weekend, with heavy snowfall and temperatures expected to drop to as low as 21.2F (-6C).

British Gas customers with broken boilers say they have faced weeks of delays and cancelled callouts despite paying for the company’s HomeCare scheme, which charges from £14 a month to provide breakdown cover and an annual service to around 3.4 million people.

British Gas, which has received complaints from tens of thousands of customers, apologised for its poor service and promised to improve.

A British Gas spokesman said: “We’ve identified where the issues are and we are taking the right steps to fix them. Our customers are the most important thing. We are sorry and trust us that we’ll improve.”

However, the company has been warned over the issue by the Financial Conduct Authority.

The FCA said it was aware of the problems and is working with the company to resolve them, with British Gas expected to provide a timetable for how it plans to improve its service.

Daily Telegraph

Wind farms push down energy prices says SSE boss after ‘misconstrued’ debate

The boss of energy giant SSE has hit out at a “misconstrued” notion of what is causing the current energy crisis, saying his latest wind farm could have knocked nearly £70 off bills if it had opened in time for this winter.

Alistair Phillips-Davies said that some were not understanding the cause of the hike in energy bills – something that is down to spikes in global gas prices, not the expansion of renewable energy.

What he says is supported by energy regulator Ofgem which was on Thursday forced to announce a 54% hike in energy bills for millions of households.

But on Friday, reports emerged that cabinet ministers are pushing to weaken the UK’s net zero ambitions in the belief it could drive down energy bills.

In response, Mr Phillips-Davies said: “In some quarters, the root cause of the current energy crisis is becoming misconstrued. Let’s be clear, the volatile global gas market is behind the huge price increases that are now facing millions.”

Some have also said that, if the UK had developed gas fracking sites, it might have kept gas prices down.

However, the chief executive of Shell on Thursday said that even the global giant, which produces more than 1% of the world’s natural gas, could only do “so much” to influence energy prices.

Mr Phillips-Davies said that far from being a burden, renewable energy will be the answer to bringing down bills.

He said: “Net zero, and the investment required to get there, is part of the solution, not the problem.

“Gas has an important role to play in the transition, but this is not a binary choice. We need both gas and new low-carbon technologies in order to have cleaner, cheaper and more secure energy supplies.

“Investments in indigenous, low-carbon power sources and greater flexibility will help reduce the amount of gas we need, allowing us to meet more of our own demand and rely less on imports.

“What’s more, renewables pay money back to consumers when wholesale prices are high – this has saved hundreds of millions this winter and potentially even more in the future.

“Net zero is not only an environmental decision, it’s a rational economic one. Investing now will not only reduce our future exposure to gas markets but it will also support jobs and growth.

“Short term action is clearly needed to help consumers through this very challenging period but we mustn’t blink now on net zero or we risk locking in the next energy crisis.”

Evening Standard

Octopus hands PM solution to end energy crisis in year by slashing red tape ‘bureaucracy’

With household energy bills set to skyrocket from April, the CEO of Octopus Energy has called on the Government to slash red tape to end the energy crisis by next winter.

He said: “We have got to move fast. During the pandemic, we took a 15-year process of creating a vaccine and we did it in less than a year.

“And we did that by slashing red tape. that’s what we need to do now with renewable energy generation.

“Currently, it takes 7 years on average to build a wind farm. We’ve got to learn from the pandemic and build that in a year.

“If we were building renewable generation with the same urgency now, as we did during the pandemic, we could be enjoying cheaper electricity next winter.”

Mr Jackson said that a lot of what slows energy companies down is down to “bureaucracy”

He said: “Things like the National Grid and the Government have to agree that a particular kind of power is needed.

“Well, we know what kind of power we need because we know what our customers are going to use.

“If you let companies choose the power their customers need, then companies get quicker connections to the grid and meet customers needs faster.

“Things like connecting it to the grid quickly so we can bring down prices faster.”

The Daily Express

Kwasi Kwarteng rules out cutting VAT on energy bills as cost of living continues to rise

The business secretary has again ruled out the prospect of the government cutting VAT on energy bills to provide further support as the cost of living continues to rise.

Kwasi Kwarteng told Sky News the move would be “quite regressive” because “rich people will benefit just as much as people on lower incomes”.

“That’s not something which the Conservative Party or the chancellor want to do, they want to have more progressive taxes so that people who need the money are the ones who get it,” he told Trevor Phillips on Sunday.

Pushed again on the prospect of cutting VAT, the business secretary said: “That’s up to the chancellor, I have spoken to him and that’s not something he’s considering, he had a very full package last week.”

Mr Kwarteng defended the measures announced by Chancellor Rishi Sunak on Thursday, describing them as “impressive and extensive”.

Sky News

Thousands of small businesses face huge rise in energy bills

Thousands of small businesses are being crippled by energy bill rises of up to 300 percent, warn bosses.

Some companies will face shelling out “£20,000 in extra costs just to break even” as a swathe of increases to running costs puts the squeeze on companies this year. One restaurateur told how he faces a £22,000 increase in his gas and electricity bills this year. Households across Britain were rocked on Thursday when Ofgem revealed an energy price cap rise of nearly £700 from April.

The soaring cost to domestic customers has prompted campaigners for senior citizens to call for a £500 rise in state pensions to help them heat their homes.

But retail and hospitality businesses are not protected by a price cap, so are already being hit by staggering increases in the cost of gas and electricity.

Andrew Goodacre, chief executive of the British Independent Retailers’ Association, has been contacted by business owners who have seen their bills go up from £4,000 a year to £11,000 by ­having to take out new contracts.

“Even before Thursday’s announcement we have had energy bills increasing by 150 to 300 percent depending on the business and what deal they had before,” said Mr Goodacre.

“The focus has been on the cost of living but the cost of running a business is ­actually rising faster.

“Retailers will look to pass on what costs they can, to reduce their margins, to use less labour so they have less wages and to review their opening hours.”

The retail boss added: “We have calculated that if the average energy bill doubles that is another £6,000 a year on average. Wage bills are going to go up another £6,000 with National Insurance and minimum wage increases in April, and business rates will go up by about £6,000 on average then too.

Daily Express

Thousands of tenants in England could miss out on council tax cut

Tenants in England whose rent includes council tax, or who live in homes in a council tax band above D, are among those who could miss out on the £150 grant announced by the government last week to reduce the sting of sharply rising energy bills.

The chancellor, Rishi Sunak, announced measures last Thursday after the regulator, Ofgem, lifted the maximum rate suppliers can charge for an average dual-fuel energy tariff by £693 to almost £2,000 a year.

Sunak said every household would get a one-off repayable £200 discount on their bills in October and a rebate on council tax. However, charities and thinktanks have raised concerns that using council tax as a means to reduce the rising cost of energy is inefficient and unfair, particularly for those who do not own their own homes.

The Guardian

Water bills in England and Wales to rise from April

Households can expect their water bills to rise to an average of almost £420 a year from April, compounding a record rise in energy costs and an increase in national insurance contributions that are due in the same month.

Bills will rise by an average of 1.7% in England and Wales from April, according to the industry body Water UK, pushing up the typical annual bill by roughly £7 to £419 a year. In some parts of England bills could rise by up to 10%, while others may experience a modest decrease.

Christine McGourty, the chief executive of Water UK, said customers would pay “little more than £1 a day for their water and sewerage service” and there was “a wide range of support available for those in need”.

Read Utility Week’s coverage of the water bills increase here 

The Guardian

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.