Energy: Do you have to worry about a possible insolvency of your supplier?

To say the energy market is under pressure is an understatement. With rising gas and electricity prices on the wholesale markets, the situation is becoming untenable for some providers. In the UK, no fewer than 21 distributors have collapsed since August, affecting more than 3.7 million homes. Most recently, Bulb Energy, the 6th UK operator, has been declared bankrupt and has just been placed under government supervision. However, the provider, who is complaining to several thousand customers in France, is making sure that its activities in France are not threatened for the time being. “Bulb’s operations in France will be maintained and unaffected by the trusteeship decided by the UK government. Customers do not have to switch providers: their energy supply is guaranteed and all our services continue to function normally,” Bulb told Capital.

There is currently no failure on the part of a provider in France… More precisely, no failure on the part of a provider who markets offers to private individuals. After all, the energy crisis has claimed a first victim: Hydrooption, an operator whose customers are primarily municipalities and companies. The Var-based company was placed under receivership at the end of October and notified before the license was revoked by the Directorate-General for Energy and Climate (DGEC), an administration under the Ministry of Ecological Transition. If that decision is upheld — which it probably should be — Hydrooption will simply be unable to operate. His two main customers, the army and Paris City Hall, have already had to switch dairy.

>> Also read – Rising energy prices: Leclerc is (soon) shutting down the electricity

Reduce by two the number of offers

These two episodes testify to the difficulties small operators have in fulfilling their supply contracts. “Right now, the biggest risk for some operators is having customers,” ironically François Carlier, general delegate of the CLCV consumer association. In view of the explosion in their procurement costs, many alternative providers therefore turn off the tap and no longer accept new customers. “This is currently the case with Cdiscount Energie, Vattenfall, Mega Energie, but also OHM Energie, which offers to activate your contract only on January 20, 2022,” decodes Gersende de Sabran-Pontevès, co-founder of the comparison portal Hopenergie.com.

>> Also read – Gas and Electricity: Sanctions envisaged against suppliers who increase their prices too much or terminate contracts

“We are seeing a two-fold decrease in offers, simply because the operators are no longer marketing them,” confirms Caroline Keller of the services of the National Energy Intermediary, whose official comparator (energie-info.fr) is regularly updated. Others are increasing their prices, even if it means changing current contracts. “These providers play with the two elements that they control: the price per kilowatt-hour and that of the subscription,” explains Gersende de Sabran-Pontevès. On November 1st, Engie would have increased the price of its subscription to 19.16 euros including taxes per month (for a power of 6 kVA, the most common), ie 67% more expensive than the EDF Blue Tariff subscription (regulated tariff). !

An uncertain reporting

But for some providers, these sleight of hand might not be enough. It all depends on their “coverage ratio”, ie the amount of energy bought to meet demand. “That’s the whole problem of a market that has become extremely financialized since it was opened up to competition: most suppliers have no production capacity and are forced to buy on the wholesale markets. Knowing that there are two major risks for these retailers: the volatility of prices and the evolution of their customers’ consumption,” he continues. In the current context of rising prices, if suppliers have not proactively purchased enough megawatt-hours to meet their customers’ needs and do not have the necessary cash to cover themselves, bankruptcy looms.

>> Our service – Our selection of the 3 best electricity offers of the month

With uncertain coverage, the ability of some of them to cope with the current situation is questionable. “Most of these forward purchases are made several months or even a year in advance. In this way, many suppliers have properly secured themselves until the end of the year, but not beyond that,” observes an expert. This would be the case for Green Yellow, a subsidiary of the Casino group, but also for Ekwateur. “The problem for the second is that it has almost no equity,” adds the same source. Since September, the French operator has also lost just over 10% of its customers.

relief provider

So do you have to worry about the insolvency of your supplier? Let’s leave the question of cuts straight away, because the legislator has provided for a mechanism to ensure continuity of supply: “The emergency provider”. Any consumer whose provider fails will automatically switch to that replacement provider until they select an offer that suits their needs. Issue: The exact procedures for using this service are slow to be established. The Energy Regulatory Commission (CRE) launched consultations over the summer and sent the government last month a proposal for specifications relating to the call for applications and the designation of a backup supplier for gas and electricity. These requirements, which are to come into force at the beginning of 2022, must in particular specify the maximum amount of the increase that the person or persons providing the relief may apply for.

>> Also Read – Gas, Electricity: Beware of Providers Who Offer You to Switch to Riskier Contracts

In the meantime, EDF and Local Distribution Companies (ELD) could take on the role of temporary workers. This happened even after Hydrooption went into receivership as the government temporarily appointed them emergency relief providers. As a result, some of Hydrooption’s professional customers have switched to offerings from established providers. However, not on the terms negotiated with the defaulting supplier… “These offers are short-term offers, compiled according to current market conditions,” explains one supplier. Understand that they are based on market prices and are therefore very expensive. As a result, some of Hydrooption’s business customers who have switched to EDF offerings have seen their bills skyrocket. “You have to understand that these are urgent emergencies that you don’t want customers to stay in,” quips the same provider, who recalls that any consumer who put their contract into competition at the moment would inevitably increase their bill.

>> Also read – Energy: How to better control your consumption and lower your bill?

In any case, individual customers whose supplier would go bankrupt will most likely see the pain increase. In this situation, it is best to leave the backup provider quickly and opt for a cheap offer. Several experts are now recommending returning to fixed price offers or even regulated tariffs for electricity.

>> Our service – Our selection of the 3 best gas offers of the month

Leave a Comment