Call to scrap cap
ScottishPower boss says 20 energy suppliers at risk
Keith Anderson: ‘we are facing a massacre’ (pic: Terry Murden)
Britain could lose at least 20 energy suppliers in the next month alone unless the government reviews the energy price cap, according to ScottishPower chief executive Keith Anderson.
In a series of interviews, Mr Anderson said the market could return to half a dozen players who had the scale to withstand shocks to the system.
Already 13 British suppliers have collapsed affecting more than two million customers after wholesale prices of natural gas rocketed as economies reopened from COVID-19 lockdowns.
At the turn of the year there were more than 50 smaller independent energy suppliers who shared 30% of the market.
At the same time high demand for liquefied natural gas in Asia cut supplies supplies to Europe.
“There is a significant risk you could see the market shrink all the way back to five to six companies,” said Mr Anderson.
ScottishPower, owned by the Spain-based Iberdrola, is Britain’s fifth largest energy supplier with around 8% of the domestic gas supply market.
“We expect, probably in the next month, at least another 20 suppliers will end up going bankrupt,” said Mr Anderson. “We are now going to start seeing some relatively well-run, good, commercially sound businesses going bankrupt because they just can’t pass the cost of the product through to customers.”
The soaring natural gas prices have strained Britain’s retail energy markets to breaking point, putting into question 30 years of energy deregulation which began in 1989 under then-Prime Minister Margaret Thatcher.
The so-called big six British energy companies – Centrica’s British Gas, E.ON, OVO Energy (which acquired domestic customers from SSE), EDF Energy, Scottish Power and Octopus – control more than three-quarters of the domestic gas supply market.
The cap limits the cost of energy for millions of people on suppliers’ default tariffs. It is reviewed twice a year.
Mr Anderson has called for the regulator Ofgem and the government to reform the cap and tailor support to the least well-off.
Without government and regulatory intervention, “we are in danger of just sleepwalking into an absolute massacre,” Mr Anderson said.