British Gas owner says energy bosses should face ‘fit and proper’ test as consumers face £2bn crisis bill
The head of British Gas owner Centrica has called for a “fit and proper” test for executives running energy firms after a series of insolvencies prompted by high gas price crisis that are set to leave consumers with a £2bn bill.
Chris O’Shea, chief executive of the energy giant, called for changes to ensure that it never happens again.
The spike in wholesale gas prices has seen 12 smaller suppliers collapse since the start of September alone, affecting nearly two million customers.
British Gas is the UK’s biggest energy supplier
The volatile situation this week prompted Centrica to postpone an investor event scheduled for November, citing the “unprecedented commodity price environment”.
Mr O’Shea told Sky News: “Around one third of suppliers in the market have gone out of business this year so far.
“It’s incredibly distressing for consumers and there’s a huge cost to that.
“We have to make sure this doesn’t happen again.”
Some have pinned the blame on smaller firms’ business models – which might see them buy energy at volatile “spot” prices rather than smoothing out costs by purchasing contracts for future delivery.
The surge in wholesale gas prices to record levels catches out such companies because they have to buy the expensive gas only to sell it to customers who are contracted to pay a cheaper rate.
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British Gas – Britain’s biggest supplier – and other large rivals are picking up the pieces under industry rules which sees regulator Ofgem select one of them to take on customers of each of those companies that cease trading.
Shortfalls in the money needed to pay for their energy will be met by an industry-wide levy, ultimately paid for by all household customers.
Mr O’Shea told Sky’s Ian King Live the sum was already estimated at £2bn.
He said he could not give an estimate for how many more suppliers would go out of business but said those that had not hedged or maintained customer deposits would “find it very hard to survive this winter”.
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Mr O’Shea said that in cases when account deposits made by customers to collapsed suppliers have already been spent they have to be “made good” by the bigger companies such as British Gas that pick the customers up.
Those companies also have to buy the gas and electricity the companies need on the wholesale market.
“The cost over the winter alone for each customer is around £700,” he said.
“The customer credit balances that have been spent by these customers that have gone under is £400m.
Customers of collapsed suppliers are being transferred to larger companies to ensure they continue to receiver power and energy
“There’s about two-and-a-half million customers, who each attract a cost of £700, so already the cost of this over £2bn.”
The money is recovered by Centrica and others through a two-year levy spread across every energy customer’s bill, Mr O’Shea said.
He added: “I think it’s incumbent on the regulator to make sure that every company in our sector can deliver on the promises they make to customers.
“It’s very, very simple and we have to make sure this never happens again.
“There’s a number of ways that you can do that.
“You can either hedge – you can lock in the price in the market – or you can make sure that you’ve got enough money if you don’t hedge so when prices rise that you can make good on that commitment.”
Mr O’Shea brushed off the idea that things would have been better if energy companies were in public hands, suggesting that the current issues did not turn on the question of whether the sector was privatised or nationalised.
“What today’s issues show is that the sector has to be properly regulated,” he said.
“We have to make sure that those people that run energy companies have to pass a fit and proper persons test like you do if you’re in the banking or financial services business.”
The world’s most valuable company, and first to be valued at $4trn (£2.9trn), beat market expectations in keenly anticipated financial results.
Microchip maker Nvidia recorded revenues of $46.7bn (£34.6bn) in just three months up to July, latest financial data from the company showed, slightly better than Wall Street observers had expected.
The company’s performance is seen as a bellwether for artificial intelligence (AI) demand, with investors paying close attention to see whether the hype is overblown or if significant investment will pay off.
Originally a creator of gaming graphics hardware, Nvidia’s chips help power AI capability – and the UK’s most powerful supercomputer.
Nvidia’s graphics processors underpin products such as ChatGPT from OpenAI and Gemini from Google.
Other tech giants – Microsoft, Meta and Amazon – make up Nvidia’s biggest customers and are paying large sums to embed AI into their products.
Why does it matter?
Nvidia has been central to the boom in AI development and the surge in tech stock valuations, which has seen stock markets reach record highs.
It represents about 8% of the value of the US S&P 500 stock market index of companies relied on to be stable and profitable.
Strong results will continue to fuel record highs in the market. Conversely, results that fail to live up to the hype could trigger a market tumble.
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Nvidia itself saw its share price rise more than 40% over the past year. Its value impacts anyone with cash in the US stock market, such as pension funds.
The S&P 500 rose 14% over the past year, and the tech-company-heavy NASDAQ gained 21%, largely thanks to Nvidia.
As such, its earnings can move markets as much as major economic or monetary policy announcements, like an interest rate decision.
Sir Keir Starmer with NVIDIA chief Huang at London Tech Week. Pic: AP
What next?
Revenue rises are forecast to continue to rise as Nvidia said it expected a rise to roughly $54bn (£40bn) in the next three months, more than the $53.14bn (£39.3bn) anticipated by analysts.
This excludes any potential shipments to China as export of Nvidia’s H20 chip, designed with the Biden administration’s export crackdown on advanced AI powering chips in mind, had been banned under US national security grounds.
But in recent weeks, Nvidia and another chipmaker, AMD, reached an unprecedented agreement to pay the Trump administration a 15% portion of China sales in return for export licences to send chips to China.
There were no H20 sales at all to China in the second quarter of the year, the period for which results were released on Wednesday evening.
Previously, 13% of Nvidia’s revenue came from China, with nearly 50% coming from the US.
Market reaction
Despite the expectation-beating results, Nvidia shares were down in after-hours trading, as the massive revenue rises previously booked by the company were not repeated in the latest quarter.
Compared to a year ago, revenues rose 56% and 6% compared to the three months up to April.
The absence of Chinese sales in forecasts appeared to disappoint.
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