Weekend press round-up: Kwarteng warns Ofgem as suppliers overcharge

In our latest review of stories from across the national media, energy secretary Kwasi Kwarteng urges Ofgem to crack down on suppliers that are overcharging customers. Elsewhere there are revelations about Bulb and Centrica and EDF have slammed administrators for ‘aggravating’ problems caused by the collapse of energy suppliers.

Kwasi Kwarteng warns Ofgem as energy suppliers overcharge

Kwasi Kwarteng has urged the energy watchdog to crack down on suppliers that are overcharging customers in the cost-of-living crisis.

The business secretary wrote to the head of Ofgem, the energy regulator, on Friday after being told of “troubling reports” of energy suppliers increasing their customers’ direct debit payments beyond the level required following the price cap rise. It was increased to just under £2,000 per household at the beginning of April, a 54 per cent increase.

Describing the alleged actions as “completely unacceptable behaviour”, Kwarteng said the watchdog should “not hesitate to take swift action to enforce compliance, including substantial fines”.

He said: “Now more than ever we need to closely scrutinise and hold energy companies to a high standard that the public rightly expect.

“The people who are suffering most as a result of high prices are customers, not energy suppliers.”

Ofgem had earlier said it had seen evidence suggesting that suppliers were allowing customer service “to deteriorate”.

Following the price cap rise, suppliers have significantly increased the amount collected from customers who pay by direct debit. Ofgem said it had been alerted by consumer groups and individuals to “bad practices” by some suppliers, including increasing payments by “more than is necessary” and encouraging customers to sign up to new pricing deals that “may not be in their best interest”.

With Ofgem expected to let the price cap rise to more than £2,600 in October, No 10 has ordered all departments to draw up new measures to alleviate a further squeeze on incomes.

The Times

Failed UK power supplier Bulb pays millions in bonuses

The failed gas and electricity provider Bulb Energy has been paying millions in bonuses to retain staff since its £1.7bn government bailout in November, according to people familiar with the payments.

Bulb was effectively nationalised last year after collapsing with 1.6mn customers. That has left the taxpayer with a bill which, according to official estimates, will reach £2.2bn by next year, making it the biggest state bailout since Royal Bank of Scotland in 2008.

The company continues to operate with taxpayer funds while in special administration as the government tries to find a buyer. But officials fear a staff exodus could affect its ability to continue servicing customers.

Hiring replacements would probably be difficult because of the UK’s tight labour market and the uncertainty surrounding the group. Around £2mn has been paid in quarterly retention bonuses so far, according to one person close to the government. T

he payments, which are not in the employees’ contracts, are being made to retain key staff, including customer-facing people, to continue critical operations and to support the attempts to sell the business, said two people familiar with the matter.

The Department for Business, Energy and Industrial Strategy said the employee retention scheme was needed to “maintain operational effectiveness and support Bulb’s customers whilst the energy administrators discharge their statutory responsibilities and to support the process of finding a buyer for the company”.

The costs will add to the burden on taxpayers of supplier collapses at a time when energy bills are soaring. It emerged at a parliamentary hearing last week that Hayden Wood, chief executive and founder of Bulb Energy, was still being paid the same £250,000 salary he received before the company’s rescue.

Labour MP Andy McDonald, a member of the House of Commons business select committee, asked MPs last week whether it was “morally justifiable” for taxpayers to be paying Wood’s salary.

The company, which had never made a profit since being established in 2015, owed £254mn to customers who had paid for their electricity and gas in advance when it collapsed last November.

In March 2020 it recorded a £63mn loss despite sales of £1.5bn. However, Wood and co-founder Amit Gudka together earned more than £8mn from a share sale in 2018, according to figures first reported by the Sunday Times.

Bulb said: “As part of Bulb’s fundraise in 2018, shareholders were offered the opportunity to sell shares to allow new investors to buy into the business. Hayden participated in that share sale alongside other shareholders.”

Bulb was the biggest supplier out of the 29 companies that have failed since the middle of last year as a result of poor capitalisation, inadequate hedging and a rise in wholesale gas prices.

Although millions of customers from other collapsed suppliers have been transferred to solvent rivals, Bulb was considered too large so the costs are being borne by taxpayers.

Companies that took over smaller failed suppliers have claimed £1.84bn from the energy regulator Ofgem to cover the costs. This is being passed to customers through a £68 charge on every household bill in the year from April — contributing to the almost £700 rise in bills to £1,971 this year for those consumers on a tariff covered by the price cap.

Bulb’s special administration is being run by the consultancy Teneo but most of its staff are employed through its parent company Simple Energy, which is in a separate administration run by Interpath Advisory.

The Financial Times

Drive for net zero fuels UK boom in retrofitting buildings for new use

From a former ice factory becoming a shiny home for offices and shops, to a Victorian bus works getting a new lease of life as a flexible workspace, across the country, buildings are being retrofitted and repurposed for the future.

It stands in stark contrast to what seemed like the commercial property industry’s motto in recent years: knock it all down and start again.

For several decades, buildings such as office blocks weren’t designed or built with longevity in mind. When parts and equipment such as lifts and windows wore out, landlords often opted for demolition over refurbishment.

But against the backdrop of the UK’s race to reach net zero by 2050, the climate crisis has forced all sectors of the economy to consider their emissions, prompting property owners and developers to look again at the impact of construction.

While buildings have become much more energy-efficient to run, huge amounts of energy are required – and therefore large amounts of carbon – emitted during the manufacture of components as well as in the construction. These emissions, occurring before a building is even in use, create what is known as “embodied carbon”.

“Twenty years ago, if you looked at the overall carbon impact of a building, then 80% of it might have come from how you use it,” said Chris Cummings, director at Savills Earth, the estate agent’s sustainability team.

“With a brand new glass and steel building in London now, 95% to 98% of the building’s impact will be in the materials, because it’s going to be lean and be using green energy, and the grid is decarbonising.”

The prize on offer for decarbonising the entire life cycle of a building is significant. The World Green Building Council calculates that construction, together with the energy required to heat, cool and power buildings, accounts for almost 40% of global greenhouse gas emissions.

Tenants are increasingly demanding more efficient buildings, too, and their landlords are trying to deliver this by giving old structures a new lease of life.

Grosvenor, the Duke of Westminster’s property company, which can trace its links with London property back to 1677, is retrofitting its London portfolio, including 500 Grade I- and II-listed buildings.

In an attempt to cut its carbon emissions, the company’s UK property arm has pledged to invest £90m by 2030 in retrofitting and reducing the operational emissions of its buildings.

A former ice factory, near Victoria station in central London, is one of these projects. Built in 1830, it was most recently a car garage, but is being turned into a five-storey building for offices, shops and a rooftop restaurant.

Alongside property companies, local authorities are increasingly looking to retrofitting to help them meet their emissions targets.

Full story in The Guardian

British Gas owner Centrica and EDF slam administrators for ‘aggravating’ problems caused by collapse of energy suppliers

British Gas owner Centrica and EDF have slammed administrators for ‘aggravating’ problems caused by the collapse of energy suppliers.

Centrica has written to Ofgem, demanding that the regulator intervenes to speed up the process of ‘onboarding’ customers stranded when their supplier has gone bust.

It claims administrators had not only slowed the process of handing over customers’ details, but also taken unnecessary direct debit payments, leaving consumers furious.

British Gas was named by MoneySavingExpert as the worst firm to pick up customers via the process. It took consumers from nine of the nearly 30 suppliers which went bust last year as wholesale energy costs soared. Customers cited missing credit balances, billing delays and poor communication.

But, giving evidence to MPs last week, Centrica chief Chris O’Shea said: ‘The administrator of the failed company is not incentivised to do anything quickly. They would not give us any information on credit balances… [Customers] are several months into their journey with British Gas, and they are quite rightly deeply unhappy.’

EDF UK chief Simone Rossi claimed administrators had ‘aggravated an already-difficult situation’, adding: ‘Our experience with administrators has been awful.’

Mail on Sunday

Could Anglesey’s tidal energy project drive a new energy revolution?

On the stunning and craggy coastline of Holy Island in north Wales, work has started on a construction project to generate energy from one of the world’s greatest untapped energy resources: tidal power.

The Morlais project, on the small island off the west of Anglesey has benefited from £31m in what is likely to be the last large grant for Wales from the European Union’s regional funding programme. It will install turbines at what will be one of the largest tidal stream energy sites in the world, covering 13 square miles of the seabed.

Gerallt Llewelyn Jones, a director of Morlais Energy, which is operated by Anglesey-based social enterprise Menter Môn, said: “We have strong tidal resources around Wales and they have huge potential.” Compared with wind and solar power, tidal was a more predictable energy source, he added.

The project won planning permission from the Welsh government last December and is designed to power more than 180,000 homes once fully operational. Its installation will be phased so that impact on the marine environment can be monitored.

The last deep coal mine in Wales, Tower colliery near Aberdare, closed in 2008. Proponents of tidal energy say tide power could drive a new energy revolution in the country, creating thousands of jobs. A range of tidal projects, cost billions of pounds to develop, are now being proposed, and could put Wales at the forefront of a marine energy revolution.

The Morlais project is powered by kinetic energy from tidal currents, but the larger-scale projects involve building lagoons with huge sea walls incorporating turbines powered by the rise and fall of tides. The west coast of Britain has one of the highest tidal ranges in the world.

One of the most ambitious proposals is the North Wales Tidal Lagoon, with a sea wall of more than 19 miles, from Llandudno to Prestatyn. Its backers say the £7bn project could power more than a million homes and create over 20,000 jobs.

In 2017, tidal schemes were given a boost with the publication of a review of tidal lagoons by the former energy minister Charles Hendry. He concluded that they could play a cost-effective role in the UK energy mix, helping to deliver security of supply and decarbonisation. “Tidal lagoons can be an important and exciting new industry,” he said. “We are blessed with some of the best resources in the world, which puts us in a unique position to be world leaders.”

Hendry recommended a “pathfinder” scheme, but it was never delivered. Proposals for a £1.3bn tidal lagoon in Swansea Bay were rejected in 2018, and tidal power gets only a meagre mention in the government energy strategy published this month.

Simon Hamlyn, chief executive of the British Hydropower Association (BHA), said the government had missed a “massive opportunity” by failing to include tidal lagoons, tidal barrages and hydropower as a major element in its new energy strategy.

He said: “It’s an incomprehensible omission. I simply cannot understand why the government continues to dismiss hydropower and tidal range – both of which are world-beating technologies and which could power the UK into the future.”

Full story in The Observer

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.