JAVIER BLAS: Winter is coming — and never going — as Europe’s energy crisis worsens

An employee monitors for gas leaks during safety checks at the Uniper Bierwang Natural Gas Storage Facility in Muhldorf, Germany, in this photo taken on June 10 2022. Picture: BLOOMBERG

Very few politicians seem to grasp with the magnitude of the coming crisis and its costs, with Emmanuel Macron of France and Olaf Scholz of Germany being among the only ones that appear to get it now. The EU has called for an emergency meeting of energy ministers later in July. But this should precede a larger heads-of-government summit focused on energy before the summer break.

The only chance of survival for the utilities is to pass the huge jump in wholesale prices onto their customers. But that only moves the bailout down the chain, as households and businesses would then face unaffordable bills and need government help. And Uniper and EDF are just the tip of the iceberg — two utilities among the dozens that serve more than 200-million households in the EU and UK. The majority perhaps will weather the storm. But many others are going to need help. At the very least, they will require state-backed loans and other government guarantees to buy super-expensive gas in the spot market to replace the loss of Russian gas. At worst, they will need to be nationalised, if only temporarily.

Yet the median pretax annual household income in the UK is £31,770. That means a typical household will spend more than 10% of its income paying for electricity and gas — that’s the standard definition of energy poverty. Without government money, families will default on their bills, creating a debt problem for their energy providers. Either London bails out the families, or it has to bail out the utilities.

JavierBlas is worried about winter when the problem Europe is facing now is driven by summer.

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