Small gas and electricity suppliers in turmoil

A cold shower. It is an understatement to say that the government’s announcement of a blocking of the regulated tariff (TRV) for gas and, to a lesser extent, that for electricity until next spring, has been poorly received by the competitors of Engie and EDF. Many alternative suppliers have marketed offers that are lower than the price of the TRV, but indexed to it.

Clearly, they will buy more expensive gas or electricity on the markets, but will not be able to raise their price, since the tariff is blocked. In short, they risk having to sell at a loss. “The cash flow of alternative suppliers will not be able to absorb” such a hollow, estimates Naïma Idir, president of Anode, the national association of retail energy operators, which brings together around fifteen operators, such as TotalEnergies, Eni, Enercoop, or even ekWateur.

Anode is calling for a reduction in taxation and a temporary reduction in the tariffs of network operators, each of which represents a third of the bill. Otherwise, it asks for “Compensatory measures” for suppliers. A complaint before the Council of State is not excluded. In the past, every time the formula was sprained, the Anode won.

The situation is worrying for suppliers, most of whom are in serious difficulty. Soaring gas and electricity prices could be fatal to some, especially those who carried out very aggressive price campaigns to gain new customers, when margins are very low.

In Great Britain, a dozen suppliers have already gone out of business since the start of the year, half of which in recent weeks, for lack of being able to pass the increases on to their customers’ invoices beyond a certain ceiling, set by law.

There are currently more than thirty operators on the French market. “Only those who have shareholders capable of taking the pot will resist”, underlines the co-founder and manager of the comparator Selectra.

In theory, each time a new customer is acquired, a supplier must purchase the necessary quantity of electricity or gas from the markets during the entire duration of the contract. This is called “covering up”.

In electricity, the supplier buys at a fixed price between half and two-thirds of its needs from EDF, via the Arenh mechanism, and the rest on the wholesale market. In gas, he gets his supplies only from the market, where prices have increased sevenfold over the past year. “Many operators do not have the financial capacity to cover themselves fully and risk having to pay more for their supply if prices rise further,” explains Julien Teddé, managing director of the broker Opéra Energie. Some were very weakened by the health crisis and the drop in consumption during the first confinement. They had bought too much gas and electricity which they had to sell at a loss given the collapse in prices. “

A big player in the market has already thrown in the towel. A few weeks ago, the distributor Leclerc announced to its 100,000 customers that it would stop selling them electricity from October 15. One after the other, they begin to review their prices upwards, when the contracts signed give them the possibility of doing so. This is the case of Bulb, the French subsidiary of a British operator who is also in difficulty, Ovo Energy, Mint or Planète oui and ekWateur.

Most operators are now pushing back, they have muted their offers and are no longer looking to win new customers. On the site of the energy mediator, some operators have even withdrawn their gas offer.

This situation is closely monitored by the services of the energy mediator, in particular for customers of Leclerc Energie, some of whom may have difficulty finding a market offer, or even have not read the letter telling them that their contract was coming to an end.


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