BREAKING
@BBCNewsnight has learned that gas shipping firm CNG @CNGenergyUK has written to its domestic supplier company customers saying it will no longer be providing them with gas - and they should seek alternative shippers...
@BBCNewsnight has learned that gas shipping firm CNG @CNGenergyUK has written to its domestic supplier company customers saying it will no longer be providing them with gas - and they should seek alternative shippers...
...email reads "It is with regret that I have to inform you that we do not have any further option but to exit CNG's wholesale business. This means CNG will no longer be able to provide gas shipping services..."
..."We advise you to seek alternative shipping arrangements through other known gas shippers in the market"...
...What does this mean?
First, a gas *shipper* is a company that itself provides those domestic *suppliers* which you deal with for your domestic needs with gas...
First, a gas *shipper* is a company that itself provides those domestic *suppliers* which you deal with for your domestic needs with gas...
...Newsnight understands that CNG has about 10-15 suppliers on its books. They tended to be the more thinly capitalised ones, including ones that have gone bust such as Utility Point and Avro Energy...
...It's recently had to provide gas to households without being paid by those failed suppliers & says this has caused "a significant amount of financial damage" to CNG - which is why its leaving this part of the market...
...There is no operator of last resort system for the businesss customers of gas *suppliers* that exit the market, but the regulator Ofgem and the gas body Xoserve say they have a systemt to ensure business customers constinue to get their gas...
...the problem posed by CNG leaving the market is that it will ratchet further financial pressure on its 10-15 thinly capitalised supplier customers...
...CNG had attracted lots of new entrants to the domestic supplier market by attractive financial terms.
It's far from clear whether they will be able to get another shipper - and if they can't then they will have to give up and transfer their customers to Ofgem...
It's far from clear whether they will be able to get another shipper - and if they can't then they will have to give up and transfer their customers to Ofgem...
...So the significance of CNG's news today is that it could well accelerate the demise of more domestic energy supplier firms
In the email from CNG to its customers it states: "We expect more suppliers to fail in the coming weeks"
BEIS spokesperson on CNG:
“Should any gas shippers cease trading, we have a clear, well-rehearsed process in place to make sure customers are protected and supply is not interrupted.”
“Should any gas shippers cease trading, we have a clear, well-rehearsed process in place to make sure customers are protected and supply is not interrupted.”
And an Ofgem spokesperson:
“Our number one priority is protecting customers. If a gas shipper stops trading, industry processes ensure that gas supplies continue uninterrupted.”
“Our number one priority is protecting customers. If a gas shipper stops trading, industry processes ensure that gas supplies continue uninterrupted.”
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