For some time now I have been suggesting that if the government continues to beat up on the hated 'Big 6' energy suppliers, it may wake up to find only 5, with RWE and Scottish Power (Iberdrola of Spain) probably the weakest hands. E.on has its problems too: and while the others (Centrica, SSE and EDF) all probably have sufficient UK energy market ballast to stick around and play 'last man standing', even Centrica has been known to make dark hints.
The beating these guys take isn't just non-stop public floggings in front of fatuous parliamentary committee hearings or in the media. Nor is it even the fines that Ofgem periodically boxes their ears with (they probably deserve them). It's also the extraordinary burden of social obligations and 'green' policy objectives they must comply with, because under current and future energy policy they are the vehicle through which government raises billions, soon to be tens of billions for its inane interventions in the energy markets. No wonder the barriers to entry in the sector are considered well-nigh insurmountable. General taxation would be the honest (and progressive) way of doing this but they find levies on unavoidable energy bills a more expedient approach.
And now RWE has sold off a large chunk of its UK supply portfolio. Of course this is being spun as creating a 'Big 7', hence better for competition: but this shouldn't fool anyone. RWE is a sickly beast, having taken even worse beatings at the hands of German energy policy, and desperately hanging on (like E.on) for massive compo they are suing the German government for in respect of the half-baked, summary closures of their nukes.
Companies have sold chunks of portfolio before, but earlier sales were part of of the baleful consolidation process which, coupled with the restoration of vertical-integration-via-acquisition that we've slated here before, is how we got to the 'Big 6' stasis everyone seems to despise.
In many respects we already had a Big 7 because GdF of France has quietly assembled a UK portfolio of power generation assets and industrial customers making it bigger than Scottish Power in most aspects other than residential customers (of which it doesn't have any). And Gazprom (yes, Gazprom) already takes the #8 position. But there ain't much scope for small players in this market (and why should there be?), notwithstanding that gas retailing (to industrial customers) is a relatively straightforward proposition (not electricity, though - nor residential sales). From time to time a fresh new hopeful joins the fray, for example Co-op Energy (!). Good luck to them all.
So - let's see how Utility Warehouse, the proud new owners of 770,000 of RWE's best UK customers, make out in this bracing environment.
And watch out for further retrenchment, by RWE and others. That's a warning for HMG as well as a comment for investors: how much investment towards their mad, hundred-billion-pound energy schemes can they expect from these guys when their balance sheets are under such pressure ?