Last 2021 and early 2022, a large number of energy companies in the UK went bust.
Now all that is on the news is how the UK Government are going to impose a windfall tax on energy companies because their profits are soaring.
How do these two things happen at the same time?
In: 23
Energy producers and energy suppliers are two different things.
Energy producers are those who have the solar/wind farms, the power plants, the oil and gas extraction infrastructure, etc.
Energy suppliers are those who buy electricity /gas / etc from the producers and sell it on to retail customers like you and me.
The producers are making bank.
The suppliers are in the middle trying to turn a profit with rapidly changing supply prices, but long-term contract commitments which forces them to supply fuel at pre-negotiated rates way below the cost that they are having to buy the energy for. I, for example, am currently in the middle of a 2 year fixed rate deal which means my supplier has to still charge me the cost of gas as we agreed in summer 2021, even though the actual electricity and gas prices they are now paying are much higher.
The market in the UK is pretty screwed up anyway; privatisation led to some really gnarly relationships between suppliers, producers, and the power operators / infrastructure managers. We also had some deregulation of supplier provision which led to an influx of small suppliers who were trading on the edge of affordability. When they got whacked with massive price hikes they didn’t have enough in the bank to smooth over the cracks.
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