UK energy supplier Iresa has ceased trading – Ofgem

LONDON (Reuters) – British small energy supplier Iresa Limited has ceased trading, market regulator Ofgem said on Friday, after the company was banned from taking on new clients due to poor customer service.

Iresa, based in northwest London, has less than 100,000 domestic customers.

Last month, Ofgem extended a ban on the firm taking on new clients after it failed to improve customer services.

Under energy market rules, Ofgem also had the power to revoke the firm’s license if it failed to meet requirements.

Iresa was not immediately available for comment.

Ofgem said the energy supply of Iresa’s customers would continue as normal and their outstanding credit balances protected under the regulator’s safety net.

Ofgem added that it will choose a new supplier to take on the company’s customers.

There are over 60 energy suppliers in Britain. An increasing number of people are switching to smaller energy companies due to price hikes from the big six firms – Centrica’s (CNA.L) British Gas, SSE (SSE.L), E.ON (EONGn.DE), EDF Energy (EDF.PA), Innogy’s (IGY.DE) Npower and Iberdrola’s (IBE.MC) Scottish Power.


Decom Energy taps £58bn UK decommissioning market

Looking for new finds is traditionally thought the exciting part of the oil and gas industry. However, Graeme Fergusson is more interested in the opposite end of the process — plugging old wells and dismantling platforms.

“Our pitch is, ‘dear operators, you don’t want do to this, but we do’,” said the managing director of Decom Energy.

Britain has been investing in the North Sea for more than 50 years. The industry estimates that it could take another 50 to plug thousands of wells and remove hundreds of platforms and thousands of kilometres of pipelines. Executives believe the decommissioning industry, still in its early years, will grow and potentially become a lucrative business in its own right.

The Oil & Gas Authority (OGA), the industry regulator, in June said it estimated the cost to decommission all the infrastructure on the UK Continental Shelf at £58bn from 2018 onwards.

Mr Fergusson hopes his company can capture a slice of the action by taking ownership of declining fields in the final years of production and guiding them through to the end. Decom Energy, he argues, has a key selling point as it can bring its history and expertise as an operator to bear on the challenge. “We see a gap in the market for an operator-led decommissioning specialist,” he said.

It has not been a straightforward journey to reach this point. Decom was formed in 2016 to buy out its operating subsidiary, Fairfield Energy. The latter was launched in 2005 with backing from a clutch of private investors led by private equity group Warburg Pincus to acquire North Sea assets that were being shed by the oil majors and breathe new life into them. Fairfield went on to build a portfolio of fields and in 2008 the company became the operator of assets in the Greater Dunlin Area in the East Shetland Basin, close to the boundary line with Norway.

Fairfield considered an initial public offering in 2010 but this was pulled in part because its portfolio was not broad enough. However, the oil price crash in 2014, which hit the industry hard, finally put paid to its ambitions of becoming a leading North Sea exploration and production group.

In the second half of 2015 the company decided it was time to change direction, said Mr Fergusson. It would transform itself into a decommissioning specialist and start with its own assets in the Dunlin area.

Fast forward to 2016 and Decom Energy Limited was born, backed by its four founders including Mr Fergusson who had joined Fairfield in 2011.

The aim, said Mr Fergusson, was to turn decommissioning into a positive move. Despite the change in strategic direction the company managed to retain most of its core workforce of around 75.

“Engineers like problems,” said Mr Fergusson. The company has already learnt a lot from tackling some of the complex issues in the Dunlin area where three approved decommissioning programmes are already under way. It hopes to offer that expertise to others. Recommended Scottish economy Scotland’s ports gear up for the day North Sea oil runs dry

“Now it’s about striking a deal with the operator,” said Mr Ferguson, adding that talks were under way with several companies about a number of assets. The company will consider different approaches, from offering its expertise as a contractor to taking over the operatorship of mature assets that are beyond the point of major investment.

For Britain’s oil and gas industry it is a steep learning curve. To date, much of the decommissioning activity in other parts of the world such as in the Gulf of Mexico has been of much smaller platforms than in the North Sea. The rough seas also pose a challenge.

Industry executives nevertheless believe decommissioning could become a profitable business with the potential to export the know-how abroad. Aberdeen, the oil capital of the North Sea, was hard hit by the price crash and could also benefit from increased activity.

“Decommissioning is an evolving industry,” said Fiona Legate, senior analyst at Wood Mackenzie, the energy consultancy, adding that “it offers a prize for the supply chain via new business development opportunities”.

Winners will be all the stakeholders involved — from E&P companies if they can reduce their costs as it reduces the total decommissioning bill, to the supply chain in the form of new business opportunities at a time when North Sea development work has been at an all-time low.

“It’s too early too tell when it comes to late life/decommissioning specialists, there is no proof of concept yet,” she added. Reputation is important. The downside to decommissioning is very big Graeme Fergusson

Some work is already under way. Royal Dutch Shell hired the huge, twin-hulled Pioneering Spirit vessel to remove the Brent Delta platform and transport it to Teesside for dismantling last year.

Research is also progressing into new approaches that could reduce costs. A new technique to plug and abandon wells developed by Norway’s Interwell was recently tested for the first time in Europe by Spirit Energy, on an onshore gas well in Yorkshire.

The more experienced companies become, the lower the eventual bill. In its most recent report the OGA said companies already executing decommissioning programmes had made significant efficiencies in the costs of plugging and abandoning wells. Operators are also learning to save money by tackling a large number of wells as part of a single campaign.

“Spreadsheet decommissioning is a thing of the past,” said Mr Fergusson. “Reputation is important. The downside to decommissioning is very big.”


Co-op Energy hikes gas and electricity bills for thousands of customers

Co-op Energy is raising its gas and electricity prices by 5.2 per cent from next month, a move that will affect up to 128,000 households.

The change, which takes effect from 20 August, will see bills for customers on the standard tariff rise by £61, from £1,158 to £1,218 – a total of £7.8m nationwide.

The bill hike will also impact GB Energy customers, who have been supplied by Co-op Energy since GB ceased trading in 2016.

A spokesperson for Co-op Energy said: “As the largest member-owned energy supplier in the UK, our customers are at the heart of everything we do. That is why we do our best to protect them from price fluctuations wherever possible.

“For that reason, we were the first major energy supplier to automatically move customers onto a new fixed-price default tariff rather than our variable tariffs, and why we have sought to absorb the significant increases in wholesale energy costs this year.

“However, this is not sustainable indefinitely and we have therefore reluctantly taken the decision to pass on some of these costs to customers on our Green Pioneer tariff.”

Rik Smith, energy expert, said: “The news from Co-operative Energy today is the 25th overall increase announced this year. We have now seen at least one price rise from Britain’s ten biggest energy suppliers in 2018 as well as hikes from numerous smaller providers.”

Mr Smith said that in spite of the recent warm weather, “it has been a tough year for energy customers” who have seen their bills skyrocket by an average of 5.6 per cent, or £58.


Fuel and energy prices to push UK inflation to four-month high

RECENT hikes in energy costs and petrol prices are expected to send UK inflation to its highest level in four months when official figures are disclosed on Wednesday.

A consensus of economists expect the Office for National Statistics’ (ONS) June Consumer Price Index (CPI) to come in at 2.6 percent, up from 2.4 percent in both May and April.

The last time CPI was higher was in February, when inflation was 2.7 percent.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, expects a stronger reading to match February’s figures.

“The contribution to inflation from motor fuel, electricity and natural gas prices likely leapt.”

He noted that 10 of the 12 largest energy suppliers – including British Gas, Scottish Power, EDF Energy – have announced price rises which will kick in over the summer.

“In addition, BRC (British Retail Consortium) data suggest that core goods inflation rose.”

Mr Tombs was pointing to figures which showed that BRC’s non-food shop price index jumped by 0.9 percent month on month, marking the biggest June increase since the BRC’s records began in 2006.

That increase was due to higher prices for clothing and recreational goods.

A further rise in CPI is likely to strengthen the case for a Bank of England interest rate hike next month, though concerns that prices are rising faster than wages could see rate-setters have second thoughts.

The latest data from the ONS show that average earnings increased by 2.5 percent in the year to May, up just slightly from 2.4% the previous month.

Ed Monk, an associate director for personal investing at Fidelity International, said: “If inflation does jump back up after this weakening in pay growth, then it adds to the conundrum for the Bank of England’s Monetary Policy Committee who are desperate to deliver a rate hike in August’s MPC meeting.

“Higher inflation would support that position but an absence of sustained real wage growth as well as ongoing fears about the impact that Brexit will have on the UK economy means that we could see the ‘unreliable boyfriend’ make an appearance again if Mark Carney and the central bank is forced to make another U-turn come August.”

The EY Item Club earlier this week said it expects a steady slide in CPI over the remainder of the year.

It said: “The steady downward progression in Consumer Price Index (CPI) inflation observed earlier this year looks likely to reverse course, at least temporarily, over the next few months.”

The think-tank said it expects CPI to rise back up to 2.7 percent in the near term before “softening” to end 2018 at 2.3 percent.

That is up from its 2 percent year-end forecast released in the spring.