It’s been an extraordinarily intense and worrying few days for our sector. The extreme spikes in an already high wholesale gas price are having serious consequences for our industry, our customers and indeed the wider economy. While we hope for some respite from price rises and the supporting causes of the current difficulties, what has already happened has ensured that we are facing a very challenging few months. This certainly isn’t going to be a week-long crisis before everything settles back to ‘normal’.
You could draw some parallels with the onset of the coronavirus epidemic, but I think this is a crisis management exercise of a different magnitude, certainly in terms of the consequences for the retail sector. Another point of difference being that, unlike with coronavirus, here we find ourselves squarely in the focus of media headlines, political scrutiny and public concern.
As Energy UK, we’ve been engaged in emergency meetings with Government and regulators, talking to as many of our supplier members as possible, doing an extensive round of media interviews and responding to the political scrutiny, most notably with an appearance in front of the BEIS Select Committee on Wednesday.
Part of our message has been to try and provide some reassurance. Nobody’s denying the seriousness of the situation, but equally customers reading headlines and alarming speculation about gas shortages, a potential string of supplier failures and steep rises in their bills understandably get worried – as do investors.
I have heard from many suppliers that people are contacting call centres in significant volumes, concerned that the country might run out of energy, that their provider might go out of business – cutting them off in the process – or that they face a steep increase in their bill. We have been doing our best to explain the situation to customers in public through the media, explaining things like the price cap and what industry is doing in this moment.
Meanwhile, in our discussions with Government, we are emphasising that customers were already facing a very difficult time this winter and so we’ve stressed that protecting their interests is the top priority. This is mutually inclusive to our job, as your trade body, to minimise disruption to the sector and its suppliers. On which point, I should say that we are extremely aware that Members have different views of the risks and issues – both in retail and in the wider membership.
I have been very pleased to speak with many members over the past few days – from security of supply with the system operator and our generators, through to securing a roundtable for smaller suppliers to speak directly to the Secretary of State, we are keen to make sure that all points of view are heard. In the short term, our priority is to minimise the impacts on customers and support our retail members through the immediate crunch.
However, as you will know, we’ve been trying to sound the alarm about the attention paid to retail relative to other aspects of the sector, and approaches to retail regulation, to this Government and Ofgem for years and warning that the sector is fragile, and (as importantly) unable to invest and innovate for the future.
If you wanted an illustration of this disinterest, then you couldn’t do much better than point to the profoundly disappointing Retail Strategy – published in July this year, which was both backword looking and piecemeal, recommending measures like collective switching that the sector universally believed would be harmful to the ability of the market to innovate for Net Zero. There is no doubt in my mind that on the other side of this, the Government needs to be taking a long look at its approach to retail and making sure it is fit for the energy transition ahead.
We know it’s going to be really challenging time for many of you. As Energy UK, we’ll continue to do our utmost to support and speak up for the sector.