‘Many more energy suppliers could go bust next winter’

More bankruptcies might come because companies will be less protected by hedging strategies, MPs told

Big Zero Report 2022

Many more energy companies might be forced to cease to trade next winter, an energy analyst has predicted.

Dr Jack Sharples, a Research Fellow at Oxford Institute for Energy Studies told the Business, Energy and Industrial Strategy Committee during a session on energy security that a lack of business hedging strategies might lead to more bankruptcies.

In the last few days, gas prices have skyrocketed as a consequence of the war in Ukraine.

Dr Sharples said: “The primary impact (of the war) has been on price and we are talking specifically here about natural gas.

“We are now seeing phenomenal record prices for natural gas and that is the primary impact so far.

“If wholesale gas prices remain high for the next several months then we are going to see another significant increase in the price cap, in household energy bills.

“But unfortunately, not only the level of the price will be higher, but also companies will be almost worse prepared.

“Because in advance of the price cap going up on 1st of October last year large retail gas suppliers were well hedged – while now looking at October 2022 the possibility of those companies having hedged in advance will be much lower.

“So it’s going to not only be difficult for final consumers but for energy companies as well. This is why I fear we may see further bankruptcies on energy providers.”

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