Is this the biggest scandal since Enron?

Working in the energy market I get to hear a lot of rumours. Rumours of customers being mis-sold overpriced energy, rumours of rules being broken, rumours of impending bankruptcies.

However, sometimes a rumour comes along that stops me in my tracks.

If this particular rumour is true, it could be the biggest scandal since Enron.?

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Let’s say I own an energy company supplying gas to 100,000 households. I don’t like taking risks, so I’ve bought all the gas I need to supply my customers for the next 12 months, and I’ve fixed the gas price for them over the same period. My customers are now protected from any price rises.

This gas might have cost me around 40 Euros per MWh if I’d locked in the price in the early months of 2021. Assuming an average annual consumption of 20 MWh per household, this gas was worth 80 million Euros (40 Euros x 20 MWh x 100,000 households = 80 million Euros).

So far so good.?

Fast forward to October 2021 and gas prices for winter 2021/2022 have rocketed up to over 90 Euros per MWh. If I had to buy the same amount of gas at a price of 90 Euros it would now cost me 90 Euros x 20 MWh x 100,000 households = 180 million Euros, i.e. 100 million Euros more than I paid a few months ago.

Thank goodness I bought gas when it was much cheaper. 50 Euros per MWh cheaper, in fact.

But wait. If one of my customers leaves me now, I will have bought more gas than I need. If that happens I can sell 20 MWh of gas to another player in the market and make a one-time profit of 50 Euros x 20 MWh = 1,000 Euros.?

1,000 Euros for losing one customer.

Now it gets interesting: What if I found a way to stop supplying more customers?

What if I could stop supplying all of my customers?

How much profit can I make?

1,000 Euros per customer. 100,000 customers. 1,000 x 100,000 = 100 million Euros.

100 million Euros. Profit.

If only there was a way to have someone else supply all my customers, I could pocket 100 million Euros.?

But wait. In Germany, when a supplier fails, the customers automatically get taken on by the Grundversorger (basic supplier). Then the Grundversorger is responsible for buying the gas to supply these customers, not my company. Of course, the customers lose their protection from price rises, and ultimately it is them who end up bearing the cost.

But let’s think about me.

If I can find a way to transfer my 100,000 customers on the Grundversorger, I might be able to walk away with 100 million Euros.

100 million Euros. Profit.

And I might not even be doing anything illegal. Sure, my business might not survive after shedding 100,000 customers, and I might have to lay off my team. But so long as that costs me much less than 100 million Euros, I’m sitting pretty.

Time to make some phone calls.

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To be clear, the situation I have described above is entirely fictional. I have seen no evidence that this or similar things have happened in Germany, in the UK, or anywhere else. I don’t even know if it is legally or practically possible.

But the fact that intelligent people in the energy market are talking about this rumour frightens me. When there is this much money to be made, the incentives to make it a reality are huge.?

So I have one ask to the incoming German government: Please make sure this stays an unfounded rumour. We can’t afford for this to become reality.