Iain Conn, Centrica Group Chief Executive is quoted in an FT article by Andrew Ward on 5 December about changing wholesale prices in the energy market and their effect on energy suppliers and their customers.
The UK market has had more that 40 new energy supply companies start up over the last five years. The smaller players flourished during a period of low wholesale prices and were encouraged by the UK Government which saw the competition as the key driver to keep household bills as low as possible.
The recent collapse of GB Energy, a small gas and electricity supplier, has highlighted how conditions are now changing in favour of the medium and large suppliers because they have power-generating capacity and strong hedging policies that can cope with the increase in wholesale prices.
Iain said “Supplying energy is about more than just setting up a call centre, some independents do not have experience of managing risk.”
Although data from Morgan Stanley suggests that this competitive market has succeeded as the UK gas and electricity prices are among the lowest in Europe.
Andrew Ward also referred to the deal we announced last week to sell our entire portfolio of gas assets in Trinidad and Tobago to Shell Exploration and Production.
Iain said “Centrica is not abandoning upstream production altogether — it still has assets in the North Sea and Morecambe Bay in the Irish Sea. The Group has no plans to become a 'virtual' energy supplier without generating capacity of its own.
"However, our priority is increasingly the consumer end of the business through services such as Hive. We want to turn the relationship with customers from providing a commodity to providing a service which gives people more control over their energy use.”