There’s a Shade of Evergrande in the U.K. Energy Crisis
Skewed incentives and weak balance sheets are at the root of the wave of recent supplier failures
Low power mode.
Photographer: Bloomberg/BloombergBarely a week goes by without a U.K. electricity and gas supplier being toppled by soaring commodity prices. Millions of British customers face an unsettling wait to learn if their power provider will survive, who’ll take over their contract, and whether their energy bills will increase. Britain’s energy regulator Ofgem — the Office of Gas and Electricity Management — has written to those companies still standing demanding urgent information on their finances.
Alas, after studying some of their recent published accounts, I doubt the responses to Ofgem are reassuring. Even before energy prices skyrocketed, many suppliers were loss-making and had liabilities far in excess of their few assets.