LONDON, Dec 8 (Reuters) – Shell Energy (SHEL.L) has pumped nearly $1.5 billion into its U.K. energy retail business this year to help it weather huge swings in electricity prices that have knocked out several companies, Shell Energy said. British Power’s rival collapses. in a filing Thursday.
Since late 2021, U.K. power companies have been hit by wild swings in energy prices due to gas supply shortages, exacerbated after Russia slashed supplies to Europe following its February invasion of Ukraine.
The volatility has led to several bankruptcies in the industry, including the British government’s preparedness to bail out Bulb at a cost of up to 6.5 billion pounds ($8 billion).
Shell Energy’s operating loss rose to £102.4 million in 2021 from £83.6 million a year earlier, according to the company’s financial results released on Thursday.
The loss was “primarily driven by market conditions. In particular, the unprecedented rise in energy prices in the second half of 2021 had an adverse impact on financial performance, including increased costs due to supplier failures in the market and the inability to deliver higher energy costs ,” according to the submitted results.
To help its subsidiaries, Shell has pumped a total of 1.2 billion pounds into Shell Energy this year, Shell Energy said.
This included a one-off cash injection of 200 million euros in February and March, and a 288 million euro “capital injection” to “enable (the) company to meet its obligations until December 31, 2023”.
Shell is also providing a £680m working capital loan to Shell Energy “to meet its short-term working capital needs” until the end of next year.
Shell declined to comment.
Shell Energy was formed following Shell’s acquisition of First Utility in 2018 as part of its long-term strategy to transform the UK into a hub for renewable energy supply.
The company has significantly expanded its customer base in recent years by acquiring Post Office’s rival businesses and taking on more than 500,000 customers from defunct businesses since 2021.
It now has about 1.5 million customers.
The cash infusion will have little impact on Shell’s profits, which rose to a record $30 billion in the first nine months of 2022.
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Reporting by Ron Busso; Editing by Susan Fenton
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