Exclusive: Yu Energy warns six-month business support will not be enough
Market volatility will endure beyond this winter and businesses could face ultra-high energy bills well into next year, warned Yu Energy.
The challenger supplier’s chief executive Bobby Kalar told City PM he was “really pleased and encouraged” with the announced Energy Bill Relief Scheme, which caps costs for electricity and gas for businesses.
However, Kalar believed it was vital the Government provided clarity over what would happen after six months, when the scheme is set for conclusion.
He said: “Now, it’s incredibly positive the government is lending the support for six months to help businesses over that a tough winter period, which is always difficult to in terms of usage. But I’d be encouraged to get more information from the government in terms of what happens after the six months.”
The Energy Bill Relief Scheme is open for businesses that signed contracts from April, with the Government funding the difference between wholesale prices and the capped rates.
It will limit costs for electricity to £211 per megawatt hour (MWh) and £75 per MWh for gas. covering businesses, charities and public sector buildings.
Estimates for the scheme’s overall cost vary from £22-48bn according to Investec, depending on wholesale costs over the coming months.
The Government has said it will review the scheme after three months, to assess how best to protect vulnerable businesses.
While expectations for wholesale costs over winter have declined in recent weeks amid eased fears of supply shortages, the looming prospect of a further Russian squeeze on European gas flows remain.
There there are also still challenging factors for energy supplies such as nuclear outages in France and competition to buy liquefied natural gas (LNG) from the Gulf states and US.
Yu backs innovation to drive down bills
Kalar argued there had to be a focus on long-term solutions for driving down energy bills.
Alongside insulation, this included investing in technology such as smart meters so that people can manage their energy supply.
The energy firm launched Yu Smart earlier this year, rolling out smart meters and increasing its online accessibility so people can measure their use and keep track of bills.
He said: “We’ve taken that bold step to transform our business, to innovate and digitise our business. This not only helps protect our business in terms of the challenge of shifting from a manual paper driven business to an automated digital data driven business, it also gives the customer the ability to take advantage of these platforms.
“It gives the customer the power to manage using our platforms and that ultimately benefits all parties, and gives them an opportunity to take to to use that technology to make our lives easier.”
The retail supplier has also successfully launched its smart metering business, Yu Smart, which has helped widened its earning margins from 0.8 per cent to 2.1 per cent and lowered its operational costs from 6.1 per cent to 4.6 per cent of overall revenue.
Yu Group posted its interim results earlier today, with the energy firm reporting a 389 per cent boom in profits, reporting earnings after tax of £4.4m in its interim results.
Its revenues have spiked from £65.8m this time last year to £129.2m at the end of June 2022.
Its shares are currently up 0.65 per cent on the FTSE AIM All-Share.