Terium criticises UK government over energy market

Peter Terium, the head of German utility Innogy, believes the recent changes in the UK energy market facilitating dozens of new entrant small gas and electricity suppliers, could prove counter-productive to the country’s energy security.

FT reports that Terium, chief of Innogy’s retail and renewable arm, is ‘concerned’ at the dozens of new entrant small gas and electricity suppliers in the market. He believes it could negatively impact on investment in new power infrastructure.
Peter Terium
“Despite the political rhetoric, I don’t see many participants making an adequate return on this business, which in the long term isn’t viable,” he said. “Something has to give . . . If none of us make adequate profit, this industry is not going to get the investments it needs, the security it needs, and that’s not a good thing in the long run.”

The government is attempting to curb consumer electricity bills while at the same time it needs to facilitate investment for generation to replace phased-out coal-fired power stations and older nuclear reactors over the coming decade.

Ministers are looking for ways to encourage more consumers to shop around but Mr Terium said the cheap deals offered by smaller suppliers were not sustainable now that wholesale prices had begun to rise after a two-year slump.

 “[Small suppliers] offer low prices but without having their electricity . . . hedged over a long period of time, which isn’t a responsible long-term model,” he said. “They bet on falling power prices, and that works as long as power prices come down. But if the tide turns against you, you are squeezed and that’s exactly what has happened.”

Mr Terium said that, despite the challenges, Innogy would not quit the UK: “We’re always in for the long haul and we are in the UK too.”

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