En­ergy firms on the brink of col­lapse re­veals re­port

The Sunday Telegraph - Money & Business - - Front Page - By Jil­lian Am­brose

HALF of Bri­tain’s en­ergy sup­pli­ers face an ex­is­ten­tial risk af­ter the “Beast from the East” tore through the bal­ance sheets of the in­dus­try’s small play­ers.

Thou­sands of en­ergy cus­tomers could be left in limbo due to a high risk that around 10 of the most frag­ile sup­pli­ers are on the brink of go­ing un­der.

Many hun­dreds of thou­sands more bill pay­ers face the risk of sud­den en­ergy tar­iff hikes be­cause al­most 40 sup­pli­ers may be forced to squeeze their cus­tomers to sur­vive.

The star­tling strain en­dured by the in­dus­try in the wake of the volatile win­ter en­ergy mar­ket is laid bare in leaked pro­pri­etary data compiled by one of the City’s top an­a­lyt­ics firms, Dun and Brad­street.

The re­port, seen by The Sun­day Tele­graph, ranks 37 of Bri­tain’s 81 en­ergy sup­pli­ers as be­ing at risk. Eight are iden­ti­fied as be­ing on the brink of fail­ing based on foren­sic anal­y­sis of com­pany fi­nan­cial ac­counts and trade pay­ments.

The dire health warn­ing un­der­lines the strug­gle of en­ergy sup­pli­ers, which have en­dured a win­ter of price spikes not seen in six years, and face the threat of the Govern­ment’s loom­ing en­ergy price cap later in the year.

The list in­cludes many of the sup­pli­ers that rely on of­fer­ing some of the mar­ket’s cheap­est deals to see off the steady rise in com­pe­ti­tion. One of the worst hit sup­pli­ers, Iresa En­ergy, has al­ready qui­etly ac­cepted a ma­jor bailout from a larger peer within the last month. The sup­plier grasped an­other stay of ex­e­cu­tion af­ter slump­ing into credit default twice last week.

The mar­ket ad­min­is­tra­tor Elexon in­formed se­nior in­dus­try sources via email, seen by The Tele­graph, that Iresa’s credit ef­fec­tively ran dry on Mon­day, and again on Wed­nes­day, be­fore it man­aged to re­solve the default at the end of the week.

Iresa had al­ready of­fered up its en­tire busi­ness as col­lat­eral to bor­row an un­spec­i­fied sum from busi­ness en­ergy com­pany Con­tract Nat­u­ral Gas (CNG) last month, ac­cord­ing to doc­u­ments filed to Com­pa­nies House.

A spokesman for CNG said the com­pany was not able to com­ment, and Iresa did not re­spond.

Iresa’s bat­tle to stay afloat comes weeks af­ter the reg­u­la­tor forced the Not­ting­hamshire-based sup­plier to stop tak­ing on new cus­tomers while it in­ves­ti­gates whether Iresa broke rules re­lat­ing to “cus­tomer in­for­ma­tion and cus­tomer con­tact”.

En­ergy sup­ply bosses fear the reg­u­la­tor may force their com­pa­nies to pick up swathes of dis­grun­tled en­ergy cus­tomers if a smaller mar­ket rival goes bust. Their frag­ile profit mar­gins have been tested by the sud­den freeze that swept Bri­tain in late March, and dec­i­mated cash flows for poorly-funded new mar­ket en­trants af­ter en­ergy mar­kets spiked to six-year highs.

A per­fect storm of weaker Euro­pean gas pro­duc­tion, shrink­ing stor­age ca­pac­ity and ris­ing oil prices has held en­ergy mar­ket prices well above those paid last year.

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