UK announces $46 billion support plan for power firms By Reuters
Economy 39 minutes ago (Sep 08, 2022 12:56)
© Reuters. FILE PHOTO: Sheep graze beneath a row of electricity pylons near Ellesmere Port, Britain, October 11, 2021. REUTERS/Phil Noble
LONDON (Reuters) -Britain’s finance ministry and the Bank of England will launch a 40 billion pound ($46 billion) scheme to ensure energy firms are not hit by a liquidity squeeze amid volatile markets, new Prime Minister Liz Truss said on Thursday.
“I’m announcing today that with the Bank of England, we will set up a new scheme worth up to 40 billion (pounds) to ensure that firms operating in the wholesale energy markets have the liquidity they need to manage price volatility,” Truss said.
“This will stabilise the markets and decrease the likelihood that energy retailers need our support like they did last winter,” she told parliament.
Energy suppliers across Europe have struggled in the face of record high wholesale power and gas prices following Russia’s invasion of Ukraine and a cut in gas exports to Europe by Moscow.
Utilities often sell power in advance to secure a certain price but must maintain a “minimum margin” deposit in case of default before they supply the power. This cost has surged along with rocketing power prices, leaving companies struggling to find cash.
Norwegian energy company Equinor has estimated these collateral payments, known as margin calls, amounted to at least 1.5 trillion euros ($1.5 trillion) in Europe, excluding Britain.
Britain’s offer of help follows several European countries which are also providing billions in support to energy distributors.
Finland has pledged to offer 10 billion euros ($10 billion) and Sweden 250 billion Swedish crowns ($23 billion) in liquidity guarantees to their power companies.
German utility Uniper has requested financial help from its government totalling around 19 billion pounds.
Britain’s finance ministry said the support would be a last resort and only available to companies that could prove they were otherwise in sound financial health.
The Financial Times reported earlier this week that Britain’s largest energy supplier, Centrica (LON:CNA), was in talks with banks to secure billions of pounds in extra credit.
Centrica declined to comment.
($1 = 0.8675 pounds)
UK announces $46 billion support plan for power firms
By Balazs Koranyi and Francesco Canepa FRANKFURT (Reuters) -The European Central Bank raised its key interest rates by an unprecedented 75 basis points on Thursday and signalled…
FRANKFURT (Reuters) – The European Central Bank raised interest rates by an unprecedented 75 basis points on Thursday to tame runaway inflation, even as a recession is now…
COPENHAGEN (Reuters) -Denmark plans to provide 100 billion Danish crowns ($13.4 billion) in guarantees to energy firms challenged by soaring energy prices, the government said on…
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.