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Business

Thousands lose power after three substations targeted in Washington state, sheriff says

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Dec 25 (Reuters) – Thousands of residents were without power near Tacoma, Washington, after three electrical substations were vandalized, local authorities said on Sunday, adding that it was not yet clear if the Christmas Day incidents were linked.

The Pierce County Sheriff’s Department said robberies were reported at two substations belonging to Tacoma Public Utilities and another belonging to Puget Sound Energy. Deputies cited forced entry into the fenced-in area, with equipment vandalized but nothing taken from the sites, it said. More than 14,000 customers were affected.

“At this time deputies are conducting the initial investigation. We do not have any suspects in custody. It is unknown if there are any motives or if this was a coordinated attack on the power systems,” the department said in a statement on its website.

Earlier this month, a utility in North Carolina reported outages from what local authorities said were orchestrated shootings now being investigated by federal law enforcement.

The FBI has also been investigating shots fired near a power facility in South Carolina days later, and whether those two incidents could be related, NBC News and other local media have reported.

Utilities nationwide have been strained by a severe cold weather system that swept across the country this week, leaving more than 300,000 without power from the winter storm.

In east Piece County, about 2,700 people serviced by Tacoma Public Utilities remained affected midday on Sunday after an initial 7,300 residents lost power in the area, about 45 miles (72 km) south of Seattle, Tacoma Public Utilities said in a post on Twitter.

“We are working as quickly and safely as possible to restore power,” it said, noting that its substations “were attacked” earlier on Sunday morning and that the incidents were reported to police.

Representatives for Puget Sound Energy could not be immediately reached for comment.

Reporting by Susan Heavey; Editing by Leslie Adler

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US

U.S. deep freeze forecast to break Christmas Eve records

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Dec 24 (Reuters) – An arctic blast gripped much of the United States on Saturday driving power outages, flight cancellations and car wrecks, as plummeting temperatures were predicted to bring the coldest Christmas Eve on record to several cities from Pennsylvania to Georgia.

Temperatures are forecast to top out on Saturday at just 7 degrees Fahrenheit (minus 13 Celsius) in Pittsburgh, surpassing its previous all-time coldest Christmas Eve high of 13 F, set in 1983, the National Weather Service (NWS) said.

Cities in Georgia and South Carolina – Athens and Charleston – were likewise expected to record their coldest daytime Christmas Eve high temperatures, while Washington, D.C., was forecast to experience its chilliest Dec. 24 since 1989.

The flurry of yuletide temperature records were predicted as a U.S. deep freeze sharpened by perilous wind chills continued to envelope much of the eastern two-thirds of the nation into the holiday weekend.

The freeze already produced fatal car collisions around the country with CNN reporting at least 14 dead from weather-related accidents.

The arctic cold combined with a “cyclone bomb” of heavy snow and howling winds roaring out of the Great Lakes region on Friday and into the Upper Mississippi and Ohio valleys wreaked havoc on power systems, roadways and commercial air traffic.

Extreme winter weather was blamed for at least five deaths on Friday.

Two motorists were killed, and numerous others injured, in a 50-vehicle pileup that shut down the Ohio Turnpike in both directions during a blizzard near Toledo, forcing an evacuation of stranded motorists by bus to keep them from freezing in their cars, officials said.

Three more weather-related fatalities were confirmed in neighboring Kentucky – two from car accidents and one a homeless person who died of exposure.

Freezing rain and ice from a separate storm in the Pacific Northwest made travel treacherous there as well on Friday.

[1/7] A view of an area after heavy snowfall in Regent, North Dakota, U.S. December 23, 2022, in this picture obtained from social media. Blake Rafferty/Twitter@BlakeRafferty1/via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. MANDATORY CREDIT. NO RESALES. NO ARCHIVES

BORDER TO BORDER

From the Canadian to the Mexican border and coast to coast, some 240 million people in all were under winter weather warnings and advisories of some sort on Friday, according to the weather service.

The NWS said its map of existing or impending meteorological hazards “depicts one of the greatest extents of winter weather warnings and advisories ever.”

With energy systems across the country strained by rising demand for heat and storm-related damage to transmission lines, as many as 1.8 million U.S. homes and businesses were left without power as of early Saturday morning, according to tracking site Poweroutage.us.

The disruptions upended daily routines and holiday plans for millions of Americans during one of the busiest travel periods of the year.

The American Automobile Association had estimated that 112.7 million people planned to venture 50 miles (80 km) or more from home between Friday and Jan. 2. But stormy weather heading into the weekend likely ended up keeping many of them at home.

At least 3,741 U.S. flights were canceled on Saturday, with total delays tallying 10,297, according to flight-tracking service FlightAware. More than 5,000 flights were cancelled on Friday, the flight tracking said.

The city of Buffalo and its surrounding county on the edge of Lake Erie in western New York imposed a driving ban, and all three Buffalo-area border crossing bridges were closed to inbound traffic from Canada due to the weather.

The severe weather prompted authorities across the country to open warming centers in libraries and police stations while scrambling to expand temporary shelter for the homeless. The challenge was compounded by the influx of migrants crossing the U.S. southern border by the thousands in recent weeks.

Bitter cold intensified by high winds extended through the Deep South to the U.S.-Mexico border, plunging wind chill factors to single digits Fahrenheit (minus 18 to minus 13 Celsius) in El Paso, Texas. Exposure to such conditions can cause frostbite within minutes.

Reporting by Rich McKay in Atlanta; Additional reporting by Joel Schectman, Gabriella Borter, Tim Reid, Lisa Baertlein, Erwin Seba, Susan Heavey, Laila Kearney, Alyson McClaren, Aleksandra Michalska, and Scott DiSavino; Writing by Steve Gorman; Editing by Jonathan Oatis, Aurora Ellis, William Mallard and Diane Craft

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Business

Storm cuts U.S. oil, gas, power output, sending prices higher

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Dec 23 (Reuters) – Frigid cold and blowing winds on Friday knocked out power and cut energy production across the United States, driving up heating and electricity prices as people prepared for holiday celebrations.

Winter Storm Elliott brought sub-freezing temperatures and extreme weather alerts to about two-thirds of the United States, with cold and snow in some areas to linger through the Christmas holiday.

More than 1.5 million homes and businesses lost power, oil refineries in Texas cut gasoline and diesel production on equipment failures, and heating and power prices surged on the losses. Oil and gas output from North Dakota to Texas suffered freeze-ins, cutting supplies.

Some 1.5 million barrels of daily refining capacity along the U.S. Gulf Coast was shut due to the bitterly cold temperatures. The production losses are not expected to last, but they have lifted fuel prices.

Knocked out were TotalEnergies (TTEF.PA), Motiva Enterprises (MOTIV.UL) and Marathon Petroleum (MPC.N) facilities outside Houston. Cold weather also disrupted Exxon Mobil (XOM.N), LyondellBasell (LYB.N) and Valero Energy (VLO.N) plants in Texas that produce gasoline, diesel and jet fuel.

Sempra Infrastructure’s Cameron LNG plant in Louisiana said weather disrupted its production of liquefied natural gas without providing details. Crews at the 12 million tonne-per-year facility were trying to restore output, it said.

Freeze-ins – in which ice crystals halt oil and gas production – this week trimmed production in North Dakota’s oilfields by 300,000 to 350,000 barrels per day, or a third of normal. In Texas’s Permian oilfield, the freeze led to more gas being withdrawn than was injected, said El Paso Natural Gas operator Kinder Morgan Inc. (KMI.N).

U.S. benchmark oil prices on Friday jumped 2.4% to $79.56, and next-day gas in west Texas jumped 22% to around $9 per million British thermal units , the highest since the state’s 2021 deep freeze.

Power prices on Texas’s grid also spiked to $3,700 per megawatt hour, prompting generators to add more power to the grid before prices fell back as thermal and solar supplies came online.

New England’s bulk power supplier said it expected to have enough to supply demand, but elsewhere strong winds led to outages largely in the Southeast and Midwest; North Carolina counted more than 187,000 without power.

“Crews are restoring power but high winds are making repairs challenging at most of the 4,600 outage locations,” Duke Energy spokesman Jeff Brooks wrote on Twitter.

Heating oil and natural gas futures rose sharply in response to the cold. U.S. heating oil futures gained 4.3% while natural gas futures rose 2.5%.

In New England, gas for Friday at the Algonquin hub soared 361% to a near 11-month high of $30 mmBtu.

About half of the power generated in New England comes from gas-fired plants, but on the coldest days, power generators shift to burn more oil. According to grid operator New England ISO, power companies’ generation mix was at 17% from oil-fired plants as of midday Friday.

Gas output dropped about 6.5 billion cubic feet per day (bcfd) over the past four days to a preliminary nine-month low of 92.4 bcfd on Friday as wells froze in Texas, Oklahoma, North Dakota, Pennsylvania and elsewhere.

That is the biggest drop in output since the February 2021 freeze knocked out power for millions in Texas.

One billion cubic feet is enough gas to supply about 5 million U.S. homes for a day.

Reporting by Erwin Seba and Scott DiSavino; additional reporting by Arathy Somasekhar and Laila Kearney; editing by Jonathan Oatis, Kirsten Donovan, Aurora Ellis and Leslie Adler

Our Standards: The Thomson Reuters Trust Principles.

Scott Disavino

Thomson Reuters

Covers the North American power and natural gas markets.

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World

German car giants and Asian battery kings: a match made in Hungary

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  • German, Chinese and S.Koreans head to Hungary
  • They dominate auto investment and subsidies
  • Orban’s Hungary keen to court foreign business

BERLIN/BUDAPEST, Dec 13 (Reuters) – German automakers and Asian battery suppliers are getting together in Hungary in a multi-billion-dollar marriage of convenience to drive their electric ambitions.

The companies are flocking to central Europe, where Viktor Orban’s government is defying Western wariness of China and offering generous benefits to host foreign operations and stake Hungary’s claim as a global centre for electric vehicles (EVs).

Investment in the Hungarian auto industry is being dominated by three countries – Germany, a champion carmaker, plus China and South Korea, EV battery leaders way ahead of European rivals.

Companies from those three countries have accounted for 29 out of the 31 cash subsidies handed out by Hungary for major investments in its auto and battery sector over the past decade, according to a Reuters analysis of government data that shows the scale of German, Chinese and Korean convergence there.

“Cathodes, anodes, separators, assembly lines, the full battery supply chain is here,” said Dirk Woelfer of the German-Hungarian Chamber of Commerce in Budapest. “This is a foot in the door to Europe.”

Recipients of such subsidies included the likes of German automakers BMW (BMWG.DE) and Mercedes-Benz (MBGn.DE), and battery makers such as China’s BYD and Korean rival Samsung SDI (006400.KS). The median subsidy level has been 15% of investment.

In total, Hungary has received over 14 billion euros ($15 billion) in foreign direct investment into its battery sector alone in the past six years, according to government figures.

Major investments are broadly classed as those worth over 5-10 million euros, varying with factors such as jobs created.

State incentives and the opportunity for automakers and battery suppliers to work next door to each other is proving a strong pull, according to interviews with about 20 industry players and consultants in Germany, Hungary, China and South Korea.

China’s CATL (300750.SZ), the world’s No. 1 EV battery maker, and Korean battery giants SK Innovation (096770.KS) and Samsung SDI, all told Reuters that the planned proximity to German carmakers was a key factor in their decisions to invest in Hungary, as well as being able to source separators and other components there.

CATL is investing $7.6 billion to build Europe’s largest battery plant in Hungary. This plant and the $2.1 billion BMW factory will both be sited in the city of Debrecen, which is attracting an ecosystem of suppliers, ranging from makers of brakes and battery cathodes to industrial machinery.

Mercedes-Benz is converting its factory in Kecskemet to produce electric cars, while Volkswagen’s (VOWG_p.DE) Audi is making cars and electric motors in Gyor.

Such big business could present a boon for Prime Minister Orban’s government as the country faces its toughest economic environment in more than a decade, with inflation running above 20%, the economy slowing and EU funds in limbo.

Yet the Hungarian EVs project also faces stiff obstacles, according to many of the industry insiders.

One key concern is the huge demands that massive battery plants will place on the electricity grid, which needs to shift away from fossil fuels towards renewables to meet the net-zero emissions targets of much of the auto industry, the people said.

A lack of specialised workers in Hungary to work in battery cell manufacturing could also drag on capacity, they added.

HIPA, the Hungarian Foreign Ministry agency responsible for attracting investments in areas ranging from batteries and cars to logistics, did not respond to Reuters queries about the EV industry.

‘CHINA’S MADE GOOD STEPS’

Hungary’s welcome to Asian battery makers might jar with concerns expressed by Brussels and Berlin about the perils of Europe becoming too dependent on China and other foreign powers, particularly in technologies central to the green transition.

Still, for now, the need to ramp up EV output leaves the European auto industry little choice but to source from Asian players, said Csaba Kilian of Hungary’s automotive association.

“I absolutely agree that European manufacturers should have their own sources … but it’s a competition, and China has made good steps,” he added. “There is a learning curve.”

Europe should have a EV battery manufacturing capacity of 1,200 gigawatt hours (GWh) by 2031 if current plans come to fruition, outstripping expected demand of 875 GWh, Benchmark Mineral Intelligence (BMI) estimates. But of that 1,200 GWh, 44% will be provided by Asian companies with factories in Europe, ahead of homegrown firms on 43% and U.S. pioneer Tesla (TSLA.O) with 13%, according to a Reuters calculation based on BMI data.

The prospects for developing a battery sector in Germany have been set back by record energy there as a result of the loss of Russian gas, according to autos consultants at Boston Consulting Group and Berylls Strategy Advisors.

Hungary offers a comparatively stable energy system bolstered by nuclear energy, as well as high subsidies and Europe’s lowest corporate tax rate of 9%.

The entire battery supply chain has come to the country, said Ilka von Dalwigk, policy manager at the European Battery Alliance, launched by the European Union in 2017 to kick-start a homegrown industry.

“Everything is located there. When we look at the forecast for 2025 and 2030, it looks like it will have one of the largest production capacities in Europe,” she added.

“It might very well be that Hungary is in fact the next big battery production cluster in Europe.”

Asked about concerns about reliance on Asia for technology, an EU official said the bloc – which must approve member state subsidies to investors – had a system in place to cooperate and exchange information on investments from non-EU countries that may affect security.

The European Commission is currently in talks with Hungary over the size of the subsidy the country will offer to CATL for building the Debrecen plant, the official added.

‘SENDING THE WRONG SIGNAL’

For some Western companies, setting up shop in Hungary is a tough decision.

German autos supplier Schaeffler said it was on the verge of setting up its primary electric motor plant in Hungary rather than Germany in August because of the appeal of Hungary’s incentives, but decided on Germany for fear of sending “the wrong signal” to Germans who fear a loss of jobs to overseas.

Other industry players expressed a range of concerns over potential pitfalls for the burgeoning Hungarian auto industry as factories ramped up, including the power grid issue.

Batteries, in particular, are highly energy-intensive parts of EVs to produce, requiring high amounts of power for the drying the materials and machine operation.

Hungary’s sources of energy in 2021 comprised 80% fossil fuels, 14.5% nuclear and 3.6% solar, according to a Reuters calculation of data from the BP Statistical Review of World Energy.

The mix spells trouble for carmakers who will soon need to showcase carbon-free credentials across their supply chains under new German and European legislation.

Hungarian Foreign Minister Peter Szijjarto met senior executives from BMW and auto suppliers including Schaeffler and Knorr-Bremse in Munich last month, ahead of the German carmaker announcing it was beefing up its investment in the country.

Topics discussed included plans to improve logistics infrastructure in Hungary and increasing the amount of renewables energy used for the power grid, according to one of the companies that attended.

When BMW first announced its plan to build its Debrecen plant, in 2018, the government committed to spending around 135 billion forints on improving local infrastructure, according to calculations by the German-Hungarian Chamber of Commerce.

On the battery side, CATL told Reuters it was considering developing solar power with local partners in Hungary.

Despite the risks, Alexander Timmer, a partner at Munich-based consultants Berylls Strategy Advisors who has worked on several autos and battery projects in Hungary, said the country presented an appealing package.

“The combination of cost advantages, state subsidies, and closeness to automakers’ plants makes Hungary increasingly attractive to battery producers, he added.

($1 = 397.54 forints; $1 = 0.9483 euros)

Reporting by Victoria Waldersee in Berlin, Gergely Szakacs in Budapest; Additional reporting by Heekyong Yang, Zhang Yan; Editing by Pravin Char

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Business

California offshore wind auction bids top $460 mln on day two

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Dec 7 (Reuters) – The first ever auction of offshore wind development rights off the coast of California entered its second day on Wednesday, with high bids topping $460 million.

The Biden administration’s sale is a major milestone in the its goal to put turbines along every U.S. coastline and a critical test of developer appetite for investment in floating wind turbines, an emerging technology necessary in locations where the ocean floor is too deep for fixed equipment.

The Interior Department’s Bureau of Ocean Energy Management (BOEM) is auctioning five lease areas equal to a combined 373,267 acres (151,056 hectares) off the state’s north and central coasts. Previous federal offshore wind auctions have all been for leases in shallower waters of the Atlantic Ocean.

After 22 rounds of bidding, high bids totaled a combined $462.1 million. Two leases off the central coast had commanded high bids of more than $100 million, with the remaining leases attracting high bids in a range of $62.7 million to $98.8 million, according to live auction results on the BOEM web site.

The identities of the bidders are not disclosed during the auction, but 43 companies had been approved to participate.

They include established offshore wind players like Avangrid Inc (AGR.N), Orsted (ORSTED.CO) and Equinor (EQNR.OL), which are all developing projects on the U.S. East Coast, as well as potential new entrants including Swedish floating wind developer Hexicon (HEXI.ST) and Macquarie (MQG.AX) unit Corio.

Reporting by Nichola Groom; Editing by Alexander Smith

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US

Factbox: Is the Kakhovka dam in Ukraine about to be blown?

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Oct 21 (Reuters) – Russia and Ukraine have accused each other of planning to blow up the Kakhovka hydro-electric dam on the Dnipro River, a step that would unleash a devastating flood across a large area of southern Ukraine.

What is the Kakhovka dam, is it about to be blown and what impact would that have?

SIGNIFICANCE OF THE DAM

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* The dam, 30 metres (yards) tall and 3.2 km (2 miles) long, was built in 1956 on the Dnipro river as part of the Kakhovka hydroelectric power plant.

* It holds an 18 km3 reservoir which also supplies water to the Crimean peninsula, annexed by Russia in 2014, and to the Zaporizhzhia nuclear plant, which is also under Russian control.

* The volume of water in the reservoir is about equal to the Great Salt Lake in the U.S. state of Utah.

* Blowing the Soviet-era dam, which is controlled by Russia, would unleash a wall of devastating floodwater across much of the Kherson region which Russia last month proclaimed as annexed in the face of a Ukrainian advance.

* Destroying the Kakhovka hydro-electric power plant would also add to Ukraine’s energy woes after weeks of Russian missile strikes aimed at generation and grid facilities which Kyiv said have damaged a third of its country-wide power network.

ALLEGATIONS

* Sergei Surovikin, the commander of Russian forces in Ukraine, said on Tuesday he had information that Ukrainian forces were preparing a massive strike on the dam and had already used U.S.-supplied HIMARS missiles of a major strike, he said, could be a disaster.

“We have information on the possibility of the Kyiv regime using prohibited methods of war in the area of the city of Kherson, on the preparation by Kyiv of a massive missile strike on the Kakhovka hydro-electric dam,” Surovikin said.

Ukrainian officials said the allegation was a sign that Moscow planned to attack the dam and blame Kyiv.

* Ukrainian President Volodymyr Zelenskiy said on Thursday that Russia had mined the dam and was preparing to blow it, a step he compared to the use of weapons of mass destruction.

“I informed the Europeans today, during the meeting of the European Council, about the next terrorist attack, which Russia is preparing for at the Kakhovka hydroelectric power plant,” he said. “Destroying the dam would mean a large-scale disaster.”

Blowing the dam, he said, would also destroy the water supply to Crimea and thus show that Russia had accepted that it could not hold onto the peninsula.

Kirill Stremousov, the Russian-installed deputy head of the annexed Kherson region, said Kyiv’s allegations that Russia had mined the dam were false.

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Reporting by Reuters; editing by Guy Faulconbridge and Philippa Fletcher

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Business

Toshiba shares jump on report of possible $19 bln buyout

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TOKYO, Oct 13 (Reuters) – Shares in Toshiba Corp (6502.T) on Thursday surged on a report that a domestic investor-led group was looking at a $19 billion bid – a potential deal that would likely lead to foreign activist shareholders being bought out after years of tension.

A consortium led by private equity firm Japan Industrial Partners and which also includes Chubu Electric Power Co (9502.T) has been given preferred bidder status in the second round of bidding, Kyodo news agency and other media have reported.

The 2.8 trillion yen figure cited by Kyodo would mark a 26% premium to Wednesday’s closing price.

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The shares were up 7% in afternoon trade, on track for their biggest one-day gain in more than a year. They have risen some 17% this year.

Once a storied conglomerate, Toshiba has been weakened by accounting and governance scandals. Attempts to turn itself around have been overshadowed in recent years by discord between management and its many activist shareholders.

The consortium will put up around 1 trillion yen in equity, with the rest of the money likely to come from bank loans, Kyodo said, adding that financing talks were ongoing and the offer value could change depending on future movements of Toshiba’s stock price.

Toshiba has declined to comment on the report.

It was not immediately clear how many bids Toshiba is seriously considering but the contest to take over the company is likely still an open race between Japan Industrial Partners and state-backed Japan Investment Corp, said Travis Lundy, a Quiddity Advisors analyst who publishes on the Smartkarma platform.

The two had previously joined forces to bid for Toshiba but have since gone their separate ways, sources have said. Japan Investment Corp has since been in talks with private equity firm Bain Capital, one of several overseas funds that passed the first round of bidding, local media have reported.

Toshiba and activist shareholders have been at odds over the direction of the company, with several large foreign funds pushing the conglomerate to consider private equity bids.

Tensions culminated last year when a shareholder-commissioned investigation concluded management had colluded with Japan’s trade ministry – which sees the company’s nuclear and defence technology as a strategic asset – to block overseas investors from gaining influence at its 2020 shareholder meeting.

“The only way to get rid of the activists is to buy them out,” Lundy said.

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Reporting by Sam Byford; Editing by David Dolan and Edwina Gibbs

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US

California urges power cuts as demand heads toward record

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Power lines are shown as California consumers prepare for more possible outages following weekend outages to reduce system strain during a brutal heat wave amid the outbreak of coronavirus disease (COVID-19) in Carlsbad, California, U.S., August 17, 2020. REUTERS/Mike Blake

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Sept 6 (Reuters) – California’s grid operator projected record-breaking power demand on Tuesday and called on consumers to conserve energy for the seventh consecutive day to avoid blackouts amid soaring temperatures.

The California Independent System Operator (ISO) urged residents to cut power use in the late afternoon and early evening as the sun sets and the state’s vast supply of solar-generated electricity recedes.

California’s week-long run of record-breaking temperatures is projected to continue this week with highs reaching into the 110s Fahrenheit (mid 40s Celsius) in interior parts of the state, according to the National Weather Service.

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The ISO forecast demand would peak at 51,590 megawatts (MW) on Tuesday, topping the current record of 50,270 MW in 2006, before sliding to 49,868 MW on Wednesday.

Late on Tuesday morning, solar was supplying about a third of the state’s power demand.

“We need a reduction in energy use that is two or three times greater than what we’ve seen so far as this historic heat wave continues to intensify,” Elliot Mainzer, CEO of the ISO, said in a statement.

If demand for power exhausts the grid’s electric reserves, the ISO said it would instruct utilities to start imposing rotating outages. It would be the first time the state has taken such a measure since a brutal heat wave in August 2020 forced power cuts over two days to around 800,000 homes and businesses.

U.S. power prices in California and other western states for Tuesday soared to their highest since that 2020 heat wave.

Power prices at the Palo Verde hub in Arizona and SP-15 in Southern California rose to $850 and $505 per megawatt hour, respectively. That was their highest since hitting record highs of $1,311 in Palo Verde and $698 in SP-15 in August 2020 when the ISO last imposed rotating outages.

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Reporting by Scott DiSavino in New York and Nichola Groom in Los Angeles; Editing by Sandra Maler

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World

British household energy bills to jump 80% to over $4,000 a year

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A gas cooker is seen in Boroughbridge, northern England November 13, 2012. REUTERS/Nigel Roddis

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  • Price cap for 24 million households to rise from October
  • Even higher prices expected in January
  • Regulator calls for urgent government intervention
  • ‘This is a national emergency,’ Labour opposition says

LONDON, Aug 26 (Reuters) – British energy bills will jump 80% to an average of 3,549 pounds ($4,188) a year from October, the regulator said on Friday, plunging millions of households into fuel poverty and businesses into jeopardy unless the government steps in.

Ofgem CEO Jonathan Brearley said the rise would have a massive impact on households across Britain, and another increase was likely in January as Russia’s move to throttle European supplies drives wholesale gas prices to record highs.

“This is a catastrophe,” Britain’s leading consumer rights champion Martin Lewis said, warning that people would die if they refused to cook food or heat their homes this winter.

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Brearley said the government response needed to match the scale of the crisis with “urgent and decisive” action.

Prime Minister Boris Johnson, who has less than two weeks left in office, said his successor would announce “extra cash” targeted at the most vulnerable next month.

“But what I don’t think we should be doing is trying to cap the whole thing for absolutely everybody, the richest households in the country,” he told reporters.

In May, when price forecasts were significantly lower, the government announced a 400-pound ($472) discount on consumer bills for this winter.

The opposition Labour Party said that if it were in power it would freeze prices, which could cost around 60 billion pounds a year – almost as much as the COVID pandemic furlough scheme.

The pressures are being felt across Europe but in Britain, which is particularly dependent on gas, the price rises are eye-watering. read more

An annual average bill of 1,277 pounds last year will hit 3,549 pounds this year and leading forecaster Cornwall Insight said prices were likely to rocket again in 2023.

It expects bills to peak in the second quarter at 6,616 pounds and households could pay around 500 pounds a month for energy in 2023, a higher sum than rent or mortgage for many.

The surge has ballooned inflation to a 40-year high and the Bank of England has warned of a lengthy recession. Despite the dismal outlook, Britain’s response has been hampered by the race to replace Johnson that runs until Sept. 5, focused on the votes of Conservative party members keen on tax and spending cuts.

The two candidates – Foreign Secretary Liz Truss and former finance minister Rishi Sunak – have clashed over how to respond, with the front-runner Truss initially saying she would rather cut taxes than give “handouts”.

Both sides have acknowledged that the poorest in society will need support and the government went further on Friday in saying that households should look at how much energy they use – after previously saying people would know what to do.

‘NATIONAL EMERGENCY’

The Labour party said the country could wait no longer for action. “This is a national emergency,” finance spokesperson Rachel Reeves said.

Truss and Sunak have suggested suspending environmental levies or cutting a sales tax – both ideas dismissed by analysts as far too little to blunt the big hit to household budgets.

Increases in wholesale prices are passed on to British consumers through a price cap, calculated every three months, that was designed to stop energy suppliers profiteering but is now the lowest price available for 24 million households.

Such is the volatility in the sector that almost 30 energy retailers have gone out of business and Ofgem said most domestic suppliers are not making a profit.

Supplier E.on said Britain should accelerate its move away from gas and better insulate its draughty Victorian-era housing stock, while rival Scottish Power urged the government to set up a deficit fund to keep bills down and spread the cost over a 10-15 year period.

Ofgem said customers who could not pay their bills would be offered affordable repayment plans by their supplier.

They would only be forced to move to prepayment meters, which charge above-average rates, as a “last resort”, it said.

The market is too unstable to forecast the next cap for January, Ofgem said, but conditions in the gas market in winter meant prices could get “significantly worse” through 2023.

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Reporting by Paul Sandle and Kylie MacLellan; editing by Kate Holton, Jason Neely and Toby Chopra

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World

China’s scorching southwest extends power curbs as drought, heatwave continue

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  • China announces 11th consecutive heat ‘red alert’
  • Sichuan extends industrial power use curbs until Aug. 25
  • Chongqing cuts working hours of commercial venues
  • Shortages could affect Tesla

SHANGHAI, Aug 22 (Reuters) – China’s scorched southwestern regions extended curbs on power consumption on Monday as they deal with dwindling hydropower output and surging household electricity demand during a long drought and heatwave.

State weather forecasters issued a heat “red alert” for the 11th consecutive day on Monday, as extreme weather continues to play havoc with power supplies and damage crops. They also raised the national drought alert to “orange” – the second-highest level.

The drought has already “severely affected” mid-season rice and summer corn in some southern regions, the ministry of agriculture said on Sunday.

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The National Meteorological Center said as many as 62 weather stations, from Sichuan in the southwest to Fujian on the southeastern coast, saw record temperatures on Sunday. The situation could improve starting Wednesday as a cold front moves into China via Xinjiang.

The region of Chongqing, which hit temperatures of 45 degrees Celsius (113 degrees Fahrenheit) late last week, announced that opening hours at more than 500 malls and other commercial venues would be shortened starting Monday to ease power demand.

Malls on the list contacted by Reuters on Monday confirmed they had received the government notice and would abide by the rules. Two hotels on the list said they were still operating normally but would restrict air conditioner use.

In neighbouring Sichuan province, a major hydropower generator, authorities also extended existing curbs on industrial power consumers until Thursday, financial news service Caixin said on Sunday. Power generation in Sichuan is at just half the normal level after a massive decline in water levels.

Caixin cited battery industry firms as saying that industrial power users in the cities of Yibin and Suining had been told to remain closed until Thursday.

Sichuan – a major power supplier to the rest of the country – has recently put a new coal storage base into operation to make sure its thermal plants can operate without disruption.

However, around 80% of its installed capacity is hydropower, making it especially vulnerable to fluctuations in water supplies.

People walk on a dried-up bed of a reservoir, amid hot temperatures, while many regions from southwest to east of the country along the Yangtze river have been experiencing weeks of record-breaking heatwave in Changxing, Zhejiang province, China, August 20, 2022. REUTERS/Aly Song

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Several companies confirmed on Monday that they were restricting output because of extended power supply curbs. Pesticide producer Lier Chemical Co Ltd (002258.SZ) confirmed in on Monday that restrictions would continue until Thursday.

JinkoSolar (JKS.N), a major solar power equipment manufacturer, said its Sichuan manufacturing facilities have been halted as a result of power shortages, adding that it was “uncertain” how long the measures would last.

Toyota Motor Corp (7203.T) gradually resumed operations at its Sichuan plant in China on Monday using a power generator after suspending operations last week, the company’s spokesperson said.

Several plants in Sichuan and Chongqing, including those of top battery maker CATL (300750.SZ) and the electric vehicle giant BYD (002594.SZ), have only been able to partially operate in recent weeks because of power shortages.

Sources familiar with the matter said CATL’s Yibin plant makes battery cells for Tesla (TSLA.O), and there were concerns that disruptions could eventually affect the U.S. automaker, though production at its Shanghai plant remains unchanged.

Shanghai, criticised on China’s Twitter-like Weibo for its use of electricity generated in Sichuan, imposed its own consumption restrictions on Monday, turning off decorative lighting on the riverside Bund area and parts of the financial centre of Lujiazui for two days.

Firms will be encouraged to “stagger” power consumption to reduce peak loads, and some construction projects will be suspended, the official Shanghai Daily said.

Important agricultural regions have been warning of the impact on crops, with Henan province saying more than a million hectares of land have been affected by drought so far.

About 2.2 million hectares across the Yangtze basin have been affected, according to the Ministry of Water Resources.

Poyang Lake, located in one of the Yangtze river’s flood plains and described as China’s “kidney” because of the role it plays in regulating water supplies, is now 67% smaller than the average over the last 10 years, state broadcaster CCTV said.

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Reporting by David Stanway and Zhang Yan in Shanghai, Martin Quin Pollard in Beijing; Additional reporting by the Beijing newsroom; Editing by Kim Coghill, Gerry Doyle and Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.

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