Weekend press round-up: Ministers prepare to take control of Gazprom retail arm within days

Concerns over the impact of rising energy bills dominated coverage of the sector in the national media over the weekend, including reports of protests across the UK. The government has been forced to publicly rule out energy rationing amid predictions gas prices will remain high until at least 2026. Meanwhile, Gazprom’s British supply arm may be nationalised this week, according to reports.

Ministers prepare to take control of Gazprom retail arm within days

The government is preparing to nationalise Gazprom’s British supply arm within days amid a stand-off between the Russian state-controlled energy firm and a Wall Street banking giant.

Sky News has learnt that ministers are drawing up plans to take Gazprom Marketing & Trading Retail (GM&T) into public hands if it fails to reassure financial counterparties about the nature of an apparent change of ownership signalled by its parent company last week.

The move to take control of the UK subsidiary, which could cost taxpayers billions of pounds, may happen as soon as this week, according to one industry source.

It would be among the most significant corporate repercussions so far in Britain arising from Russia’s invasion of Ukraine and the sanctions regime subsequently introduced by the government in an attempt to punish Vladimir Putin.

The Gazprom division supplies roughly 30,000 customers, including many NHS hospitals, local authorities, large retailers and industrial users of gas.

In total, it supplies more than 20% of the gas used by British companies – a growing number of which have been deserting it in recent weeks.

Sky News

Minister rules out energy rationing in UK despite Ukraine crisis

A cabinet minister has rejected calls for the UK to consider rationing energy, as a plan to drastically increase onshore wind power also appeared to be significantly scaled back.

The transport secretary, Grant Shapps, said Russia’s invasion of Ukraine had been a “massive wake-up call” for western nations about their dependence on imported oil and gas, which European countries are now trying to wean themselves off.

However, Shapps said the UK would not follow the lead of other countries, such as Germany, that have put emergency measures in place to ration gas if Russia cuts off supplies to Europe.

An international row is escalating over Russia’s demand that, from 1 April, all gas purchased by foreign countries must be paid for in roubles – a move that G7 countries have rejected.

According to Reuters, the Dutch government said it would urge consumers to use less gas, Greece has called an emergency meeting of suppliers, and the French energy regulator urged consumers not to panic.

Labour’s Jonathan Reynolds, the shadow business secretary, said fuel rationing “should be an extreme option”.

“We should be making those plans and the government should be preparing – not necessarily in public – for that situation,” he told the BBC’s Sunday Morning show.

After the prime minister, Boris Johnson, flew to Saudi Arabia and the UAE to urge oil-producing countries in the Middle East to turn on the taps, Reynolds said the government should not be “shopping from one authoritarian regime to the next for fossil fuels”.

He called for the long-delayed energy security strategy to be published with a particular focus on generating more renewable and nuclear energy, as well as improving energy efficiency.

Reynolds also said there was “a lot of complacency in this country about the relative lower exposure to Russian gas that we have”, warning that if European countries stopped importing it then they would turn to the same providers used by the UK, squeezing supplies further and keeping prices high.

But asked if he could completely rule out energy rationing in the UK, Shapps said: “Yes I can … We don’t see rationing being part of our approach to this, and nor should it be.”

Shapps instead raised the prospect of generating more offshore wind, though he appeared to walk back on plans to double the amount of onshore wind power by 2030.

The Guardian

Protests over soaring energy prices take place across UK

Thousands of people have taken to the streets in the UK in protest against the sharp rise in energy prices, as a cabinet minister said the government could not “completely nullify” the increases.

Demonstrations took place on Saturday, including one near Downing Street in central London where crowds gathered to hear speeches, including from former Labour leader Jeremy Corbyn. Other protests took place in cities including Cardiff and Birmingham. They follow a major increase in the energy price cap on Friday, with average household gas and electricity bills rising to £1,971 a year. A further jump in October could take the cost up to £2,600.

Groups including the Trades Union Congress and anti-poverty campaigners have voiced alarm at the changes, and said that when combined with increasing inflation and low pay, it could push people into “impossible choices” between heating their homes or eating.

A spokesperson for the People’s Assembly Against Austerity, the organiser of Saturday’s series of events, said: “Public outrage over the cost of living crisis is growing fast, and our response is gaining momentum.”

Corbyn said: “I’m meeting people who are terrified of the next bill, so the very least we need is a price cap on energy, and then we need to say, well look at the profits of energy companies and look at the difficulties of people living.”

The Guardian

Four more years of energy bills pain for households, economists warn

Families can expect another four years of sky-high energy bills, as economists warn that global gas prices are likely to remain elevated until at least 2026.

This month’s 54pc rise in energy bills is set to be followed by an increase of around 40pc later this year, according to official forecasts, and analysts at the Centre for Economics and Business Research said households should not expect a return to normal any time soon.

Douglas McWilliams, deputy chairman at the consultancy, warned of “consequences” for the economy as families suffer a long squeeze on their finances.

He said: “People can put up with high costs if only for a short period, but what our model suggests is, unless the Ukraine situation resolves itself, prices are likely to be high but falling for three or four years.”

This will change “fairly considerably” once more liquefied gas can be imported from countries such as Qatar to lower prices. But until that point, the strain is on.

“It is a tough scenario for people to live with,” he said. “They are going to have to get used to higher prices. They are going to have to learn to economise.”

The consultancy predicts the price per therm will dip only slowly from an average of 180p this year to 160p in 2023 and 2024, and 150p in 2025, before dropping more sharply to 118p in 2026 as Europe at last benefits from new LNG import terminals.

Sunday Telegraph

Government in talks to build ‘hundreds’ of mini-nuclear reactors across UK

A US energy developer backed by a fund linked to Elon Musk is in talks with the Government to build a fleet of small nuclear reactors across the UK.

Last Energy wants to build its first “mini-nuclear” power plant by 2025 and has identified its first site in Wales, The Sunday Telegraph has learnt.

The company intends to spend £1.4bn on 10 reactors by the end of the decade. Last Energy’s end goal is to build “hundreds of plants” across the UK, sources close to the company said.

The proposals are a direct challenge to Rolls-Royce, which is racing to secure approval for its own British-made fleet of mini reactors.

Last Energy is one of 12 select investments by start-up backer Gigafund.

Three of these – SpaceX, The Boring Company, and Neuralink – are founded by Mr Musk, 50, the world’s richest person and chief executive of electric car maker Tesla.

Gigafund’s managing partner Luke Nosek sits on the board of SpaceX, the rocket company which made its maiden civilian voyage in September last year.

Last Energy met with Government aides last week to discuss plans.

Its reactors are considerably smaller than those of competitors and are forecast to cost £50m and are prefabricated before being transported by 80 lorries, company insiders claimed.

Each plant is the size of a football pitch and the height of a double-decker bus – roughly half the size of rival reactors proposed by Rolls.

Representatives from Last Energy are believed to have told Whitehall officials that they want the UK to be the company’s “test bed” and insist that its plants will be up and running years before Rolls-Royce.

It is believed to have asked the Government for a commitment to pay £75 per MWh, considerably less than the £92.50 that the UK is locked in to paying the much larger Hinkley Point C nuclear plant once it is up and running.

Sunday Telegraph

Anglesey backed as location for first in new wave of nuclear power plants

A site on the island of Anglesey in North Wales has emerged as the front-runner inside Government for a major new UK nuclear power station, The Telegraph has learned.

Cabinet ministers have backed plans to build a new station at Wylfa, the location of a decommissioned power plant.

The proposal is for one nuclear plant with two reactors that would increase the UK’s energy capacity by 2.3 gigawatts – close to what Hinkley Point produces.

Tens of millions of pounds of taxpayers’ money from the Future Nuclear Enabling Fund to help its development are expected to be announced in the coming months,

The project is being proposed by two American companies – Westinghouse, which is responsible for the technology, and Bechtel, a construction company.

Having American firms run the project chimes with the new Whitehall drive to make sure “like-minded partners” are involved in critical national infrastructure, with Chinese state involvement being countered.

The Telegraph

High energy-using industries fear lack of support from UK ministers

Britain’s strategic heavy industries have warned they risk being left high and dry by a lack of support in the government’s upcoming energy strategy, warning that failure to follow European countries’ measures to reduce gas and electricity costs will put UK businesses at risk.

The government is expected to outline long-awaited proposals this week for a once-in-a-generation drive to invest in nuclear power and possibly more onshore wind and solar power, as well as approving continued North Sea oil and gas exploration.

The plan expected to be set out by ministers on Thursday has been delayed amid disagreements in the cabinet about which technologies to back, including a fraught battle over new nuclear power plants, with the Treasury thought to be reluctant to invest large sums in costly projects.

One industry source said heavy energy users were “not expecting anything” to help them on gas or electricity, the latter of which can cost up to 60% more than the price paid by European competitors.

Earlier this month, Boris Johnson promised measures to “address the needs of British steel, British ceramics and the whole of British industry” but the business and energy secretary, Kwasi Kwarteng, told MPs last week that the government had already taken steps to support industrial firms facing soaring costs.

Against a backdrop of ballooning energy bills for strategically important companies and major manufacturing firms, energy intensive industries told the Guardian that the mixed messages had left them fearing they will receive minimal help, or none at all.

Richard Warren, a spokesperson for the trade body UK Steel, said it had “long urged the government to reduce the politically and regulatory controlled elements of electricity bills in line with action taken by governments elsewhere”.

Simply renewing a compensation scheme that gives electricity intensive industries a refund on the cost of the UK’s emissions trading scheme, but which expired on Friday, would be only a “partial solution”.

UK Steel said the industry “needs full compensation for the costs of carbon in electricity, an increase in the relief on renewables levies, and similar reductions in network costs as already provided by governments in France, Germany, and the Netherlands”.

Stephen Elliott, the chief executive of the Chemical Industries Association, warned that prolonged high energy costs could see factories reduce operations or foreign-owned firms take their business elsewhere.

“I can’t stand in front of Kwasi Kwarteng and say that businesses will be shutting a week on Thursday, but I can’t say they’ll be viable and running full tilt, either,” he said. “Things are getting tighter as our ability to pass through cost to our customers is becoming increasingly more difficult.

“Our continental European competitors are getting more relief [following the EU’s recent crisis framework enabling more state aid in this area]. If we leave it to the moment when a chemical plant shuts, restarting those is a very challenging thing to do from a health and safety perspective responsibly.”

The Guardian

‘Huge poo islands’ prompt calls for Somerset river clean-up

Somerset councillors have called for rivers to be cleaned-up after reports of “poo islands” forming in waterways.

Somerset West and Taunton Council wants more funding for the Environment Agency (EA) and increased inspections of farms and water companies.

A motion was approved and the council will now write to environment secretary George Eustice.

An EA report in September 2020 found that all of Somerset’s rivers were “polluted beyond legal limits”

Sigurd Reimers, who took part in Extinction Rebellion protests in Taunton in 2020, told the council it was important for EA budgets to be improved to tackle the problem.

“In April 2021 the head of the Environment Agency drew attention to the fact that over the past decade, there had been cuts of more than 60 per cent to its total budget.

“I would emphasise the importance of restoring adequate funding to ensure that the EA can carry out its duties effectively,” he added.

Councillor John Hunt said he has been contacted by a resident who had encountered “huge mounds of sewage” while swimming.

“She actually sent me some photos of huge poo islands,” he added.

The motion to write to Mr Eustice was put forward by councillor Dixie Darch, who said water companies needed to prevent sewage from polluting rivers, according to the Local Democracy Reporting Service (LDRS).

BBC News

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.