Good Energy is in discussion with its financing partners to augment its working capital for the winter period.
The company is exempt from the price cap and has already raised its standard variable tariff. It plans a second rise of 30% from 17 January, to absorb sustained high commodity prices, which it says are “now expected to continue into the first quarter of 2022” alongside wind generation at a third of seasonal norms. The conditions will reduce profits for the year by a further £3 million, compared with forecasts to the market on 25 November.
Good Energy says that since 25 November, day-ahead power and gas prices have risen by 36% and 35%, respectively, while baseload power and gas prices for the three months from January are 102% and 89% higher, respectively. It says the high prices are being reflected in longer term seasonal contracts for 2022/23.
The company said, “Colder and calmer weather conditions, coupled with higher customer volumes and elevated market prices throughout the winter will require additional working capital so we are actively engaged with our financing partners to help ensure we can meet these short term working capital requirements as appropriate.”
It says it expects the second tariff increase to minimise the impact of the rising forward prices over the medium term, but warned, “We will continue to monitor the need to increase prices further, given our exemption from the price cap.”
Chief executive Nigel Pocklington said, “This is a national crisis. Wholesale gas and power prices have increased to unprecedented levels over the last three weeks, creating an extremely difficult operating environment for every business in the industry.
“While we have a very strong track record in forecasting and hedging, these unparalleled price hikes, together with the very low levels of churn within our customer base, means that we require far greater working capital to trade similar volumes at these stratospheric price levels. No one in the industry is immune. We urge the UK government to support the industry at large in navigating these short-term challenges to protect bill-payers and those that serve them.”