Home News Germany braces for energy supplier casualties

Germany braces for energy supplier casualties

by jcp

By Vera Eckert

FRANKFURT (Reuters) – Some German power suppliers could go insolvent due to soaring wholesale prices that are hitting consumers worldwide and have squeezed out companies in Britain, energy experts said on Tuesday.

Several small UK retail energy companies, caught between promises of bargain prices and the need to cover high purchase costs, have gone bust.

“When power futures double, as we have seen this year, this can lead to extreme problems when the supplier has to buy expensively on the spot market,” said Andreas Schwenzer, principal consultant at Horvath & Partners. [EL/DE]

“This makes us certain that we will also see insolvencies in Germany, namely within weeks and months,” he said.

Energy prices are rocketing due to factors ranging from Asia’s economic recovery to Europe’s carbon allowances policy and a period of lighter winds.

Unlike Britain, Germany does not have a utility price cap. Its 41.5 million households buy their energy in a flourishing but mostly unsupervised retail sector that was liberalised to create choice and dismantle monopolies.

The Bundesnetzagentur (BNetzA), the country’s regulator, said it was not tasked with monitoring procurement strategies or pricing mechanisms at suppliers.

“When suppliers adjust their prices, they must inform customers and allow them to cancel the contracts,” a BNetzA spokesperson said in a written reply to questions.

The authority also pointed to the high share of fixed elements within household utility bills.

The state has a 51% share in final power bills, mainly to support renewables, which insulates the final price somewhat from fluctuations in the wholesale market.

Digital utility Tibber, a market newcomer, said state taxes and fees must come down.

Tibber sees its business model of offering wholesale-tracking prices as superior to alternatives guaranteeing prices over certain periods if they aren’t backed up by underlying purchases.

“I believe there will be insolvencies of distribution companies for electricity and gas in this country in the next few months,” said Marion Noeldgen, Tibber’s managing director in Germany.

 

(Reporting by Vera Eckert Editing by Douglas Busvine and Mark Potter)

 

You may also like