FIRST it was Scottish-Hydro’s Ian Marchant warning that the lights could go out. Then Ignacio Galan, head of ScottishPower-owner Iberdrola, issued the same alert from Bilbao. Now we’re told gas supplies are alarmingly low. What on Earth is going on?
Last night the nation was urged by environmentalists to switch off the lights voluntarily for an hour to save the planet’s dwindling energy resources, though all those left shivering after losing power due to the snow storm would have little choice and not much sympathy for worthy causes.
Marchant and Galan, on the other hand, are concerned that the British government is not taking the shortage of energy supply seriously enough. They want guarantees on pricing to make building new gas-fired stations worthwhile.
Ofgem, the regulator, has warned there may not be enough generating capacity to ensure uninterrupted power supplies and the Department for Energy and Climate change has pin-pointed 2015 or 2016 as the critical years.
Nuclear plants could not be built quickly enough to fill the gap, but gas-fired facilities could be operating within two years. However, the price of gas is rising, eroding margins for suppliers. The public may be outraged over rising costs, but ScottishPower reckons it makes just £4 profit on the average £100 bill.
Making matters worse was the failure of an undersea pipeline connecting Britain and Belgium, pushing up the wholesale price of gas for a short time by 50 per cent to a record high before falling back when the pipeline reopened. With Britain in the grip of an unseasonal cold snap, which is expected to last a while longer, and having only three weeks of gas in storage, there was talk of gas being rationed.
That may seem a little alarmist, and the government assures us that it has plans to cope with any emergency, but energy analysts say it may be a price we have to pay for succumbing to a green agenda that has forced the closure of coal mines and inefficient gas plants while pinning too much hope on renewables.
The latter may be a cleaner and potentially important source of energy, but the conversion to renewables cannot come soon enough. The looming gap in supply should alert ministers to what is required now and in the immediate future. They have a responsibility to ensure Britain is not over-reliant on expensive and unreliable gas imports to prevent blackouts.
Who will dart in for Cupid?
Scottish entrepreneur Bill Dobbie will be looking for some tender loving care this weekend after shares in his internet-dating company Cupid crashed following serious allegations about its working practices.
Almost £10 million was wiped off the value of his stake in the Edinburgh company when Kyiv Post, a newspaper in Ukraine, revealed more claims about the firm employing “motivation” managers to lure people to sign up to its sites.
After the allegations were circulated, together with critical comments from other sources, including a hedge fund, its shares plummeted 57 per cent to close at 49p.
Dobbie, who has insisted the firm operates legally and appropriately, will be feeling particularly sore as he only recently paid £1m for 865,000 shares at 114p to demonstrate his confidence in the business. He now holds 17.6 per cent of the company.
It now looks vulnerable and there has been loose talk of a bid even before this latest crisis. Given that it has 54 million members, almost equal to the entire population of Britain, and makes good profits it would be a tasty and cheap acquisition.
In the meantime, short sellers who were behind much of Friday’s fall could force the shares to slip further. They have been targeting the stock and Cupid reckons the allegations are scare stories intended to drive down the price.
Mulberry gets a handbagging
Shares in luxury goods retailer Mulberry were given a handbagging on Friday as the popularity of one of its must-have accessories seemed to be waning.
A fall in sales of the Alexa satchel contributed to the firm issuing its second profits warning in six months. But fickle fashion tastes are not solely to blame. Shares in luxury goods have been inflated on the back of over-optimistic expectations of demand from Asia.