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BizzEnergy collapse is bleak news for UK energy market
Tuesday, November 04, 2008
The collapse this weekend of BizzEnergy, one of a handful of independent UK energy suppliers, is bleak news - and not only for the company's 170-odd employees.
It leaves the UK energy market even less competitive and even more dominated by the so-called Big Six suppliers - EDF, British Gas, Scottish Power, E.ON, RWE, npower and Scottish & Southern Energy.
BizzEnergy, whose business model involved buying power in the wholesale energy markets for resale to its network of 40,000 corporate customers, was fighting hard to crack into a tough industry dominated by giants, many of which enjoy near monopolies in their home markets.
It was also one of the most outspoken critics of the industry's structure and had appeared before a parliamentary select committee this year urging reform.
In the end, BizzEnergy, like Electricity for Business, another independent supplier that collapsed last month, failed to withstand a pernicious combination of extreme volatility in wholesale energy prices and tightening conditions in the credit markets.
Yesterday, the Big Six wasted no time in taking advantage of the insolvency to consolidate their grip on the industry. BizzEnergy's electricity customers were transferred to British Gas Business, an arm of Britain's biggest energy supplier, Centrica, in a deal worth £3.5 million that was overseen by KPMG, the administrator.
There was a certain irony in the timing of the announcement. BizzEnergy's collapse arrived in the same week that EDF is set to notify European regulators of its proposal to buy British Energy, the nuclear generator.
If approved, the deal will lead to the disappearance of yet another independent player and leave 80 per cent of Britain's wholesale power market in the control of the Big Six. Between them, they already control 99 per cent of the retail supply market.
Whatever merits the British Energy takeover may have, it is unlikely to encourage greater competition in the UK energy market.
Cynics will claim BizzEnergy was always doomed, that its business model wasn't robust enough to survive the downturn.
But it is hard not to sympathise with a small company trying to bring greater choice and an entreprenurial spirit to a highly concentrated industry.
This story was featured on the Times Website
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