Pressure on wholesale gas and electricity prices intensified this week, as two more exiting licensees brought this year’s toll of failed UK power suppliers to 24.

Ofgem confirmed that Neon Reef and Social Energy Supply, together numbering around 35,000 domestic customers, ceased trading.   Social Energy Ltd, a separate company, is unaffected and continues in business.

Balancing Settlement Code operator Elexon expelled Neon Reef and Orbit Energy last week, after both broke deadlines imposed to repair their credit ratings.

Orbit hangs by a thread. Ranked bottom for customer service by the Consumers Association out of 35 operators in June, it now owes Ofgem £ 450,000 for unpaid Feed-in Tariff contributions.

A confirmed 24 UK licenced suppliers have gone to the wall this year, eighteen of them since September.   Over two million energy accounts, overwhelmingly domestic ones, have been tossed into Ofgem’s ‘supplier of last resort’ lifeboat.

German regulators’ temporary suspension yesterday of their first steps in licencing the controversial NordStream2 pipeline panicked continental gas markets.  Price rises of up to 12% resulted, amid fears that Europe’s gas stockpiles are the lowest in a decade.    The delay is down to a delay by the Russian-backed megaproject’s Swiss operator in setting up a German-registered subsidiary, to comply with EU rules, the Bundesnetzagentur explained.

UK day-ahead electricity prices hit £2,000/MWh for early evening on Monday, platform operators EnAppSys revealed.  A wind lull covering the country left too little lower priced supply available, increasing upward pressure on prices for the evening peak.

The operator’s modelling suggests around a dozen of events seen on Monday could occur this winter if current market behaviour continues.

“When margins are tight it appears market parties withhold capacity from the day-ahead market and intraday markets to participate at high prices in the balancing market at multiples of the marginal cost of production,” Phil Hewitt, director of EnAppSys, said.

“Parties that suffer will be unhedged suppliers who will be exposed to high prices at the day-ahead and in imbalance”.

Hewitt added that, though extreme, the price hikes reflected an long-overdue market correction. “The previous four winters have been quite benign in the wholesale markets. …A number of suppliers (have grown) relatively risk-free and created a prolonged period of pain for generators in the market”.


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