Competition and free market: possible victims of high energy prices?
By Francesco CALABRETTA
Cluster Leader Italy and Hungary Audax Renewables
As many had predicted, the expensive-bill it is proving to be a phenomenon that is anything but temporary (I have also spoken about it here And here). After the significant pre-summer increase, which saw the first government intervention to lower prices, the situation has not changed for the better. On the contrary.
A crisis, the current one, which has deep-rooted, diversified causes that go far beyond the Italian borders, reducing – in fact – our margin for intervention. What remains, unfortunately, are the direct and indirect consequences. So to the impact on families and businesses, increasingly struggling to keep up with significant increases in tariffs, there is also a generalized price increase of goods and services due to the increased price of the energy needed to produce them. In this sense, nothing is more explanatory than the abundant flow of news and social comments on the probable increase of the cup of coffee to 1.50 euro cents.
What makes this situation even more loaded with negative implications is its impact on more aspects of our lives: as citizens who consume energy on a daily basis, as consumers who purchase goods and services (from shopping onwards) and possibly as entrepreneurs, whether they are micro or large companies.
Looking at this last aspect, it turns out that according to the estimates of Confindustria, Italian companies will pay 37 billion euros in energy in 2022. In 2020 the figure was 20 billion and in 2018 8 with natural gas which in the meantime has increased by 700% compared to 2019.
And, in fact, in the past months, concerns have been mostly focused on the holding many activities, with particular interest in sectors such as manufacturing, agri-food or that composite galaxy of artisan micro-enterprises.
At the same time, however, little or very little has been said about something that is not just a prediction, but already a fact, namely the failure or the great financial difficulties that several companies are experiencing. energy sales company in half of Europe.
In fact, the specialized media had begun to spread news about the closure of supply companies, especially in the United Kingdom where, since the return from the holidays, some sales companies had gone bankrupt, crushed by the debts incurred for the purchase of raw materials (gas in particular) at unsustainable prices. In October, for example, two companies such as Pure Planet and Colorado Energy had closed their doors, forcing the 250 thousand users served to find a new supplier. This latter operation is proving to be anything but simple, given that most of the larger suppliers are already taking on a large number of new customers from other failed companies (Sole 24 Ore). And beyond the accusations of errors attributed At Ofgem, the energy authority across the Channel, today we have reached almost 30 operators forced to close.
It's not going any better in the countries of the Union, an area particularly affected by the increase in prices, especially gas. According to Bloomberg I'm over 40 the society that have declared bankruptcy: from Germany to the Czech Republic, passing through the Netherlands, Belgium and Finland.
In Italy the context is taking on worrying contours, considering the various suppliers that have ended up in serious difficulty. Among these are the cases of Gas & Power Care, an energy sales company in Faenza, and Alpherg, a trader born in 2018 from the joint venture between Enoi and the multinational Trafigura.
The situation, as can be imagined, is in constant flux and it is not clear what will happen in the near future. Much also depends on national plans to counteract the effects of the high energy prices and, above all, the high gas prices (as emerges from the Relationship that the European Commission published at the beginning of 2022). However, there is some evidence that is useful to start from if we want to engage in serious reasoning.
First of all, the advantageous “fixed price” offers proposed by free market operators to attract customers, have proven to be a critical element for operators forced to maintain the same rates even in the face of violent fluctuations in energy prices.
In second place, these offers that have generated competition and benefits for the consumer – free to choose the best solution – are putting in difficulty especially those subjects with "little coverage" from a financial point of view, much more exposed to suffering the consequences of negative economic conditions.
In third place, government measures such as the possibility of paying the bill in ten installments, if on the one hand it is a socially just measure to address the difficulties of those citizens most affected by the crisis, on the other hand it cannot be loaded solely on the shoulders of private groups and companies already tested by significant bank exposures for the purchase of raw materials.
Without wanting to repeat the now trite saying according to which "from every crisis comes an opportunity", the current situation is an opportunity to discuss which path to take. I say this knowing that I am part of an international group, Audax Renewables, supported by a solid financial situation and protected by far-sighted choices made on the subject of energy purchasing.
In summary, the options there are essentially two on the table. A, support a liberalized market in which a plurality of competitors operate, each able – according to their own initiative – to propose different offers. Two, let it go when it is happening without making corrections and see, once the storm is over – when it will end – how many subjects are left standing. With the risk that the consumer will find himself, at that point, having to decide between a small group of operators, with competition as an increasingly less central element.
