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Energy firms’ request for a bailout is rebuffed by ministers

Cash-strapped energy firms have been denied a state bailout amid concerns they could go bust if thousands of customers are unable to pay their bills.

Suppliers had sought a special taxpayer-backed rescue fund as British workers brace for economic hardship and businesses shut their doors – but the Government has refused to provide one and is instead directing them to a rescue loan scheme already on offer to other companies, emails show.

Last week, trade organisation Energy UK approached the Government to request its own loan scheme worth £100m a month which could be used to offer repayment holidays for struggling customers.

But energy suppliers have instead been told to rely on support already being made available more widely.

In an email to the energy suppliers, Dan Monzani, director of energy security at the Department for Business, Energy and Industrial Strategy (BEIS), said: “I would like to draw your attention to the business support measures announced by HM Treasury on March 17.

“We are aware that energy companies do not always think they are eligible when in fact you may be.”

The email then goes on to describe the range of support measures available to companies in the UK, including the Covid Corporate Finance Facility for the biggest firms and the Coronavirus Business Interruption Loan Scheme for smaller players.Small companies and the self-employed | Numbers to call

The Government has so far been reluctant to offer special assistance to individual industries, instead pointing to these £330bn lifelines.

But there is some concern among energy suppliers that vulnerable customers will not be able to pay for their gas and electricity in coming months if they are unable to return to work. The small business loan scheme has also faced criticism for being slow to deliver cash.

A number of suppliers have already seen some customers cancel direct debits, an early indication they are struggling to make payments.

A string of energy companies have large debts and virtually no safety net after several years of aggressively chasing new customers and charging ultra-low prices. 

Industry sources have said that some smaller, profitable energy suppliers are frustrated that large loss-making firms appear to be seeking ways to get a bailout without having to get their bank to approve a business plan. 

Doug Stewart, chief executive of provider Green Energy, said: “There should be no need for further intervention at present.

“The Covid-19 measures are not about supporting companies with poor business models.”Business Briefing Newsletter REFERRAL (Article)

Last week Energy UK requested that firms provide detailed information to support their claims that customers are falling behind. 

In a letter to the firms, BEIS thanked suppliers for providing evidence on potential risks. It appeared to leave open the possibility of further support by saying that the Government is still considering these cases.

One of the companies that originally approached Energy UK to discuss the bailout was Centrica, the owner of British Gas.

In a statement, the company said: “This is about supporting customers and our immediate focus is on supplying the country with the energy that will help it get through the coming months.

“This is not about propping up financially weak and unsustainable energy supply companies.”

A spokesperson for BEIS said that Government had put in place an “exceptional package of economic support for businesses, including extending the eligibility criteria for the Covid Business Interruption Loan Scheme which will allow more smaller energy businesses to qualify.”

“We continue to engage with the energy sector to understand how suppliers and their customers could be further supported,” they added.

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