Nicholas Newman Utility Week November 2017
Wholesale prices are set to soar this winter. Does this signal the death of small energy suppliers? Or will wider supply margins and hedging strategies be enough to save them?
Unsurprisingly, small energy suppliers are more vulnerable to fluctuating wholesale prices than their larger counterparts, and many will be quaking in their boots as prices rise this winter and threaten to send them the way of GB Energy Supply, which was forced to shut up shop last winter.
Even before the season has fully set in this year, UK electricity prices are around £7/MWh – 16 per cent – higher than they were last year. But small suppliers needn’t give up hope just yet.
Energy regulator Ofgem isn’t daunted by the threat of price hikes, saying it fully expects sufficient supply to meet the increases in demand throughout the winter. Oxford Energy consultant William Blyth is confident that energy prices will not spike as high as last year, as reserve margins are almost double what they were in 2016.
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