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Energy companies ‘hold millions’ in UK business cash

Energy companies are holding more than £730 million belonging to Britain’s small businesses – seriously impacting vital cashflow.

That’s according to an independent study commissioned by leading challenger brand, Utilita Energy.

With 5.5 million micro-businesses across the UK – accounting for 96 per cent of all UK businesses – Utilita’s second annual Powering the UK High Street report revealed that more than half of those surveyed (53 per cent) have paid at least £250 just to secure their energy supply. However, with the survey findings also showing the average deposit is £649, the true cost to Britain’s businesses could be far more severe.

Some have even had to fork out over £2,000 – that’s before being charged for any energy usage.

The national study looking into the treatment of small businesses by energy companies also found that three quarters of the small firms studied have seen the cost of their energy supply rise by up to £500 per year. This is more than double the increase recorded last year, at £215.

And more than half of micro-businesses surveyed still believe they get an unfair deal on energy, up from 42% in 2017.

But it’s the finding that some energy companies are charging an upfront fee, which is causing outrage amongst small firms who are already facing tough economic trading conditions.

Utilita CEO, Bill Bullen, said: “We never charge our new business customers an up-front fee. “It’s outrageous and we are astonished that our survey has found many small companies feel they are being distrusted and ripped off at a time when we should be doing all we can as a country to help them. It’s shocking to see that energy companies are holding almost three quarters of a billion pounds from micro-businesses paying £250 or more upfront – and with the average deposit at almost £650, we believe the real picture is far bleaker. Energy companies could be withholding billions.

“We offer our customers a fair deal – and provide our customers with a smart meter to put firms in control of their bills.”

Utilita customer, James Mawby, who manages the Osborne pub in Southampton, said: “We’re a small business and we have to work hard to keep our overheads under control. When we looked to change energy supplier, we were told by one of the ‘big 6’ that we would have to pay a £3,000 up-front deposit to get connected. A payment of that size would have a significant impact on our business. If our overheads increase too much we’d be in the unfortunate position of looking to reduce staff hours or the stock we buy, which would limit choice and have a negative impact on our customer numbers.”

The survey also found that more than a quarter of micro-businesses are being turned down flat for energy supply – with figures up from one in five compared to a similar research study carried out by Utilita in 2017.

Less than half of the small firms are shopping around for a better energy deal every year, with almost a quarter only looking once every three years or more.

“The findings of our survey are fascinating and we find it incredible that some energy suppliers are turning down new customers because of their rating,” added Bullen.  “At Utilita, we will never turn down a small business just because of a credit score.”

Other key findings include the fact that 74 per cent of micro-business workers spend up to 10 hours per week on admin – that’s 65 working days a year. On average, they work over 45 hours a week, with more than a third working over 50 hours a week, according to the survey.

In 2017, there were a reported 5.7 million private sector businesses in the UK. Last year Britain’s micro-businesses generated £552 billion in sales and employed around 4.1 million people.

Utilita is one of Britain’s fastest growing independent energy suppliers. It has seen its customer base treble in nearly three years to more than 675,000.

Last month it opened its first ever high street store in Gosport, Hants and recently revealed it has plans to open a further ten shops across the country.

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Windy weather carries Britain to renewable energy record

Storm Diana brought travel chaos to road, rail and airports, but the clouds did have a silver lining: the strong winds helped set a renewable energy record.

Windfarms supplied about a third of the UK’s electricity between 6pm and 6.30pm on Wednesday, a time of peak energy demand. Output hit a high of 14.9GW, beating a previous record of 14.5GW.

The milestone coincides with the official opening on Friday of E.ON’s Rampion windfarm off the coast near Brighton, which is the first in the Channel and can power about 350,000 homes.

Blustery weather has buoyed wind output in the past few days, with National Grid reporting thousands of wind turbines were the UK’s No 1 source of power across Wednesday and Thursday, at about 32% of generation. Gas power stations are usually top.

Windfarms have moved from a niche source of electricity generation a decade ago – when they supplied less than 2% – to a cornerstone of Britain’s power mix, at nearly 15% of supply last year.

The 400MW Rampion project is one of four big offshore windfarms to come online this year, along with a 92MW windfarm in Aberdeen Bay, a 353MW windfarm off the Suffolk coast and a 659MW windfarm off Cumbria, which is the world’s biggest.

More vast schemes are in the wings, with a 588MW windfarm in the Moray Firth due to become fully operational next year. The title of world’s largest windfarm will be taken by a 1,218MW project off east Yorkshire a year later.

Emma Pinchbeck, the executive director of the industry body RenewableUK, said: “It’s great to see British wind power setting new records at one of the coldest, darkest, wettest times of the year.”

Onshore windfarms are cheaper and provide more power than those offshore, but the government has blocked them from competing for subsidies

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Smart meters ‘to add £500m to energy bills’

Consumers are being forced to pay higher energy bills thanks to the cost of installing smart meters – and things could still get worse, according to the spending watchdog.

An investigation by the National Audit Office (NAO) into the £11bn roll-out of the meters has suggested that energy bills could rise by more than £500m in total. It criticised the Government for allowing so many first-generation meters, which can “go dumb” after a switch of supplier, to be installed.

The costs of the roll-out are being added to energy bills and work out at around £374 per dual-fuel household. While there are said to be long-term benefits of having a smart meter, with the annual saving estimated at £18 a year by 2030, the NAO said the roll-out had had a negative impact on consumers’ bills so far.

The watchdog also warned that the savings estimates were based on the current budget for the roll-out. They do not factor in any cost increases if, say, first-generation meters need to be replaced. The Government’s bill-cutting estimates also assume that the industry passes on savings to consumers.

Lily Green of Look After My Bills, a switching service, said: “The smart meter roll-out has been an utter shambles. The endless delays, technical flaws and underestimating of costs to the taxpayer are no way to instill confidence in people that smart meters are a good choice.”

Claire Perry, the energy minister, described the roll-out as “world leading” and said it would bring benefits worth £40bn to consumers and the industry.

Smart meter rollout

Budget for rollout of smart meters – at risk of going over budget and past its deadline
£11bn
Installations still needed to hit 2020 target
40m
Monthly installations needed to meet target
1.3m
Current monthly installation capacity
420,000

Robert Cheesewright of Smart Energy GB, which promotes smart meters, said they were a “vital upgrade” to the national infrastructure. “They are paving the way to lower bills, a more flexible national grid and greener, more sustainable energy. The savings for customers will outweigh the costs and the country will save billions of pounds,” he said.

In another blow to the roll-out, the NAO report found that around 5pc of households, including those in high-rise blocks of flats, would be unable to have switchable smart meters for the foreseeable future.

Second-generation meters that retain their functions after a supplier switch are able to be installed in 70pc of houses. A technical fix expected in the spring will extend this, but even then between 3.5pc and 5pc of properties will be unable to benefit. Work on a solution is under way.

Government sources said the problem is that the network to connect an in-home display to the smart meter’s communication hub is not strong enough for some large blocks of flats, and needs to be extended.

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UK energy provider Scottish Power to take on 129,000 new customers following Extra Energy collapse

Scottish Power, a Glasgow-based energy company founded in 1990, has been tapped this week to take on Extra Energy’s customer base after the company’s collapse last week.

The appointment of 108,000 domestic and 21,000 business customers to Scottish Power has been organised by Ofgem. The UK government’s regulator for electricity and downstream natural gas markets allocated Energy Extra’s client book to Scottish Power as part of an initiative to get customers “the best deal possible”, according to a report by Energy Live News.

Under the new agreement, Scottish Power will “honour all outstanding credit balances of the customers, including money owed to both existing and former domestic and business customers.”

New customers of Scottish power will be contacted by the ‘big six’ energy provider over the next week, after which “customers wishing to leave ScottishPower can do so.”

Philippa Pickford, Interim Director for Future Retail Markets at Ofgem said in a press release: “We are pleased to secure a deal with Scottish Power, where Extra Energy’s domestic and business customers will be offered a competitive tariff for their energy. Their credit balances will be honoured and their energy supply will continue as normal.”

She advised Extra Energy’s customer base to “wait until Scottish Power contacts you. They will give you more information about the tariff you are on and about your credit balance if you have one. Once the transfer has been completed, you can shop around for a better deal if you wish to.”

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Extra Energy collapse is the sixth this year

Another small energy supplier – Extra Energy – has ceased trading, the company has announced.

It is the sixth energy supplier to go out of business since the start of the year.

The company had attracted just 108,000 domestic customers and 21,000 business customers.

However the regulator, Ofgem, assured customers affected that their energy supplies will continue as normal, and any credit balances will be protected.

In due course a new supplier will be appointed by Ofgem, and customers will be transferred directly.

“If you are an Extra Energy customer, under our safety net, we will make sure your energy supplies are secure,” said Philippa Pickford, Ofgem’s interim director for future retail markets.

“Ofgem will now choose a new supplier and ensure you get the best deal possible. Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch.

“You can continue to rely on your energy supply as normal. We will update you when we have chosen a new supplier who will then get in touch about your new tariff.”

The other suppliers to cease trading this year were:

  • Future Energy ( January)
  • National Gas and Power (July)
  • Iresa (July)
  • Gen4U (September)
  • Usio Energy (October)

Since the gas and electricity supply markets were opened up to competition, the industry has attracted dozens of new entrants.

As of June this year there were 73 suppliers, including 67 smaller operators. Ofgem said 13 new suppliers entered the market in the year to June.

Of customers switching provider, many have chosen small energy firms over the “big six”, who have consistently lost consumers.

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UK energy prices expected to soar after Brexit

Energy UK, the industry’s trade association has warned that uncertainty in the sector will lead to increased energy prices once the UK leaves the EU in March 2019

The trade association said that pressure surrounding plans for a carbon-pricing mechanism and cross-border trade is likely to increase bills for business and domestic customers.

Earlier this year, a House of Lords committee warned that the UK faces energy shortages and increased gas and electricity bills after Brexit, if the transition is not managed well.

At the moment, the UK heavily relies on energy imported from Europe.

Following the proposed price increases, Make It Cheaper, the business energy switching service, is urging UK business owners to switch to a better business energy deal and lock prices in for as long as possible, before energy prices are due to rise post-Brexit.

Jon Elliott, CEO at Make It Cheaper, said: “Brexit is of course a hot topic for any business in the UK, and means uncertainty around all business costs. Business energy is no different.

Energy UK’s report highlights some of the causes of these likely rises and only goes to strengthen the case for switching soon for longer fixed term tariffs, securing rates for your business before they become too volatile.”

You can find out more on the Make It Cheaper blog: How will Brexit affect your business energy bills?

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Centrica’s British Gas launches first residential tariff for electric vehicle users offering cheaper electricity at night

Centrica PLC’s (LON:CNA) British Gas unit has launched a new smart time-of-use tariff for electric vehicle users offering cheaper electricity at night between 12.30am and 7.30am to charge their cars.

In a press release on its website, the FTSE 100-listed group said electric vehicle drivers use up to 80% more electricity if they charge at home and so can benefit from tariffs which pass on cheaper overnight wholesale electricity costs.

Peter Simon, Customer Propositions and Product Director at British Gas said: “This is our first residential EV product. Over the coming months, we will launch further electric vehicle charging services to both residential and business customers.”

The smart tariff is dual fuel, fixed until November 2020 and has no exit fees. The average annual bill of £1,547 is based on an average electric vehicle user consuming an additional 2,340kWh of electricity per year by charging their car. It is available for new and existing customers paying by direct debit.

Earlier this year, Centrica invested in Driivz, which offers end-to-end software solutions for electric vehicle charging, demonstrating its commitment to this market.

There are currently 200,000 electric vehicles on the road in the UK, and the number is forecast to grow to 1.4mln by 2025.

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UK’s richest man eyes North Sea oil and gas fields

Britain’s richest man Jim Ratcliffe is hoping to extend his grip on the North Sea by buying oil and gas fields from US giant ConocoPhillips.

Mr Ratcliffe’s company Ineos and ConocoPhillips have both confirmed that they are in exclusive talks.

Among the assets up for grabs is Conoco’s 6.5% stake in the Clair field, west of Shetland.

The field potentially has 7 billion barrels of oil in place, according to BP’s chief executive Bob Dudley.

BP recently bought a 16.5% stake in the Clair field from ConocoPhillips, giving the UK oil giant a total holding of 45.1%.

Reports suggest that the assets ConocoPhillips is selling could be worth as much as $3bn (£2.3bn).

They do not include the company’s oil terminal in Teesside or its commercial trading group based in London.

 

The North Sea is still a relatively new area for Mr Ratcliffe and Ineos.

The billionaire, whose £21bn fortune makes him the UK’s richest man according to the Sunday Times rich list, has traditionally invested in speciality chemicals businesses.

Ineos owns the Grangemouth oil refinery site in Scotland which manufactures a range of petrochemicals that are used in a wide range of products including bottles, food packaging and in the pharmaceuticals industry.

neos first acquired a number of North Sea gas fields in 2015 before it buying up the oil and gas business owned by Denmark’s Dong Energy for £1bn two years later.

The Sunday Times reported that Ineos had put down a deposit in exchange for three months of exclusive talks with ConocoPhillips.

Ineos declined to comment.

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Which?: Energy companies need to install 30 smart meters a minute to meet 2020 target

Consumer rights group raises fresh fears over pace of smart meter roll out, as government awaits latest damning NAO report

The scale of the challenge facing the UK’s smart meter roll out will be hammered home once again this week with the release of two major reports warning the high profile project is running badly behind schedule.

Today consumer rights group Which? published an update warning energy suppliers will need to triple the current rate of smart meter installation to hit a target of replacing all existing meters by 2020.

Which?: Energy companies need to install 30 smart meters a minute to meet 2020 target.

 

The organisation calculated that to meet the long-standing target suppliers will need to install an average of 30 smart meters per minute, every day, for the next two years, to fully replace 46 million existing meters.

The report comes just days ahead of the anticipated publication of a new report from the National Audit Office, which is expected to feature scathing criticism of the £11bn project, accusing it of being badly delayed and over budget. It is also set to highlight how the rollout has seen millions of first generation smart meters installed that will have to be upgraded in the coming years to provide the smart grid functionality and interoperability that is expected to be one of the main advantages of the technology.

The Which? report also argued that government estimates for the expected savings on an annual dual fuel bill in 2020 as a result of the rollout have already fallen from £26 to just £11.

“So far, large suppliers have installed more than 11 million smart meters, however this is just a quarter of the 46 million existing meters that could potentially be replaced,” the organisation said.

The latest update builds on an analysis from February this year, which calculated that large energy companies would need to install 24 smart meters a minute to meet the deadline. It adds that far from speeding up the rollout has slowed down in recent months.

“Energy suppliers maintain that they will meet the 2020 target, but as the deadline draws closer, Which? believes this is looking increasingly unlikely and more must be done to ensure that all consumers are offered the opportunity to benefit from upgrading to a smart meter,” the group said.

“The smart meter rollout has been plagued by problems and been massively delayed, the benefits have been overstated and the savings they could bring consumers are at risk,” added Alex Neill, Which? managing director of home products and services. “Therefore it’s time for the government to replan with industry and consumer groups to ensure people get the maximum benefit at the minimum cost.”

Smart meters and related smart grid technologies are wiodely regarded as crucial to efforts to improve energy efficiency and decarbonise UK power supplies by enabling more intelligent management of electricity supply and demand.

The government has consistently defended the handling of the roll out and a spokesman for the Department for Business, Energy, and Industrial Strategy today said the project had already seen millions of people seize the opportunity to “take control of their energy use to cut their bills”.

He added that the projected £11 a year reduction in annual fuel bills was “not insignificant” and would deliver £300m of savings across the economy in 2020 alone.

A spokesman for trade body Energy UK offered a similar take. “Energy suppliers are committed to meeting the government’s deadline of ensuring all eligible households and businesses are offered a smart meter by 2020,” he said. “The industry is working hard to reach as many customers as possible and to ensure the rollout is carried out safely, efficiently, cost-effectively and delivers a positive experience for customers. With more than 12 million smart meters now installed in Great Britain, more and more customers are enjoying the benefits that smart meters bring and are reporting high levels of satisfaction.”

Robert Cheesewright, director of corporate affairs at Smart Energy GB, the body tasked with managing the smart meter roll out, said: “Britain’s smart meter rollout is a vital upgrade for the nation’s energy infrastructure. Smart meters are crucial if we want to tackle climate change and reduce our carbon footprint. In line with the government’s figures, smart meters will help people save on average almost £50 a year on their energy bills by 2030. Energy suppliers are working hard to offer all households smart meters as soon as possible.””

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Oil and Gas UK welcomes publication of draft Brexit deal

Oil and Gas UK (OGUK) has welcomed the long-awaited publication of the draft Brexit withdrawal agreement.

The 585-page document sets out the terms of the UK leaving the European Union.

OGUK, which represents the North Sea industry, has welcomed its publication, and said it will continue to put forward its priorities to the government over discussions “in the coming days”.

It said it remains focussed on protecting the workforce, trading with the EU, the internal energy market and its license to operate.

The draft agreement states EU citizens living and working in the UK (and vice versa) will have their rights protected after Brexit.

Along with the withdrawal agreement, the UK government and the European Commission have published a shorter document setting out the Britain’s future relationship with the EU.

Some points relating to the energy sector feature, specifically on having mechanisms in place to “ensure security of supply and efficient trade”.

 

Deirdre Michie, chief executive of Oil and Gas UK, said one of the organisation’s priorities is to maintain a strong voice in Europe.

She said: “We welcome the further detail provided to industry through the draft withdrawal agreement. This is an extensive legal document which we will now analyse and review in full with our membership.

“Our focus remains on securing the best outcome for the UK’s offshore oil and gas industry. That is, protecting the offshore industry from future EU regulatory changes, minimal friction between the UK and EU, maintaining a strong voice in Europe, protecting energy trading and the internal energy market and protecting our licence to operate.

“We will continue to put forward these priorities in our discussions with the Government in the coming days.”