The Times - UK (2022-02-16)

34 Wednesday February 16 2022 | the times

Business

SSE was among the big winners

yesterday as the government awarded

£375 million of contracts at record high

prices to power plant owners to help to

keep the lights on next winter.

The FTSE 100 energy group secured

contracts worth almost £170 million to

ensure it will make three big gas-fired

power plants available when needed.

The payments were awarded

through the government’s “capacity

market” auction, designed to ensure

that power supplies can meet demand

even when the wind doesn’t blow or the

sun doesn’t shine.

John Musk, an analyst at RBC, said

that the price “demonstrates the tight-

ness currently in UK power markets”.

Uniper, the German owner of Brit-

ain’s last coal-fired plant, scooped a

£31 million contract, and several con-

tracts were awarded to develop new

battery storage projects and small gas-

fired reciprocating engines.

Under the capacity market scheme,

Record prices at power plant auction

most plants are contracted through

auctions several years in advance, with

final capacity secured one year out.

Last month, the government set a

target of securing more capacity in

the final auction for next

winter than could be pro-

vided by the genera-

tors qualified to take

part, which it said

reflected “uncer-

tainties within the

power sector”. As

a result, everyone

that entered the

auction won a

contract at the

maximum possible

price of £75 per kilo-

watt yesterday.

Musk said that “SSE

accounted for 45 per cent of

the overall capacity entering the

auction”, with its three large gas-fired

plants at Keadby 1, Keadby 2 and

Medway. The next biggest winner was

Uniper, which The Times revealed on

Monday stood to receive £31 million for

keeping its Ratcliffe-on-Soar coal

plant running next winter.

Musk said the high

price was positive not

only for those that

picked up contracts,

suggesting that

next week’s auc-

tion to secure ini-

tial capacity for

the winter of 2025-

26 “could also

achieve record re-

sults”. That would

benefit a much larger

number of companies,

but could raise concerns

over costs to consumers.

A spokesman for the Depart-

ment for Business, Energy and Indus-

trial Strategy said: “The capacity

market is worth paying for to provide

secure and affordable electricity.”

Emily Gosden Energy Editor

BA offering

sweeteners to

keep its staff

Robert Lea

The battle for airlines to keep and

recruit pilots and cabin crew as the

aviation industry readies itself for take-

off this summer has prompted British

Airways to offer staff one-off sweeten-

ers worth 10 per cent of their salaries.

Carriers have been operating at a

fraction of their capacity during nearly

two years of the pandemic and BA is

flying only 60 per cent of a normal

schedule. However, the industry

believes that with travel and testing

regimes being swept away and strong

pent-up demand for travel, summer

2022 will return to summer 2019 levels.

During the pandemic, tens of thou-

sands of air crew and other aviation

workers have been stood down around

Europe and the race is on for airlines to

1

Markets in Europe and

America staged a relief rally

and oil prices fell after Russia

indicated that it was withdrawing

some troops from military

exercises near Ukraine. Gold and

bond prices fell as safe-haven

assets lost some of their appeal

with border tensions easing

slightly, although Nato said that it

had yet to see any evidence of de-

escalation. Pages 1, 8-11, 33, 43

2

Britons have adapted to

working from home without it

significantly impairing the

nation’s productivity, official data

suggests. Output-per-hour

exceeded pre-pandemic levels for

the first time at the end of last

year, estimates from the Office for

National Statistics suggest. Page 2

3

Wages have grown faster than

inflation during the pandemic,

with real incomes almost 4 per

cent higher at the end of last year

than in February 2020, according

to the Office for National Statistics.

Pay rose by 4.9 per cent in the year

to December 2021, ONS figures

show. Pages 2, 36

4

Britain needs a new regulator

— Ofcharge — to ensure that

there are enough public

electric car recharging points in

the right places and to protect

zero-emission motorists from

excessive prices, the motor

industry says. The take-up of plug-

in vehicles is outpacing the

amount of charging infrastructure,

the industry says, and there is a

deep north-south divide. Page 22

5

Glencore has set aside

$1.5 billion to cover the likely

costs of resolving bribery and

corruption investigations. The

Swiss-based mining and

commodities group said that it

expected to resolve investigations

in America, Britain and Brazil this

year. Page 33

6

The Financial Conduct

Authority faces pressure to

pay more compensation to

the victims of the London Capital

& Finance scandal after an

independent commissioner

dismissed the watchdog’s approach

as flawed. Page 33

7

The government has

relaunched its green savings

accounts offering twice the

interest rate, apparently having

failed to tempt savers with the

“miserly” rate paid previously. The

three-year fixed-rate bonds,

available through National Savings

& Investments, were launched in

October, paying 0.65 per cent

interest, but have been relaunched

paying 1.3 per cent.

8

David Arden, the finance chief

who presided over a damaging

accounting blunder at Metro

Bank, is leaving the group weeks

after City regulators fined it for the

debacle. Page 38^

9

Atom Bank has been valued at

£435 million in what is likely

to be the digital lender’s last

fundraising round before it

attempts a listing on the stock

exchange. Page 39

10

Thousands of workers at

Airbus, the aerospace

group, have voted to strike

over an “unacceptably low” pay

offer that they say does not reflect

rising living costs. Page 41

Need to know

Glencore trying to show the

There is no place for

misconduct in the

commodities group

now, its boss declared.

Emily Gosden reports

At a court hearing in New York on a

July morning last year, Anthony

Stimler gave the first public account of

some of the historical “misconduct”

that Glencore has now set aside $1.5 bil-

lion to resolve.

Appearing by video link from Britain,

the former trader admitted to persist-

ent wrongdoing during his long career

at the Swiss-based commodities giant.

“Between around 2007 to 2009, I was

involved in discussions with another

trader to direct payments to inter-

mediaries for the purpose of bribing

Nigerian government officials in order

to obtain oil cargoes for Glencore,”

Stimler said. “From around 2011 to

2018, I approved bribe payments made

by Glencore intermediaries to govern-

ment officials in Nigeria to assist Glen-

core in receiving oil cargoes from the

Nigerian government.”

As he pleaded guilty to offences

under the Foreign Corrupt Practices

Act and money laundering laws, Stim-

ler told the court he was “aware that

other Glencore traders who worked

with me were doing the same thing by

directing our intermediaries to make

bribe payments to government offi-

cials” and that he knew his actions were

“wrong and unlawful”.

“I take full responsibility for my

actions, and I have been co-operating

with the Department of Justice and the

US Attorney’s Office in their investiga-

tions for over two years now,” he said.

Glencore has not disputed Stimler’s

account of what it calls “unacceptable”

conduct and Gary Nagle, its chief

executive, referenced the plea bargain

yesterday as he admitted: “There has

been misconduct and that’s common

knowledge.” Yet the full extent may not

become clear for some time: Stimler’s

plea bargain related to only one aspect

of one investigation out of six that

Glencore is subject to.

Worries over the potential conse-

quences of these investigations have

weighed on Glencore’s shares since the

justice department launched its inquir-

ies almost four years ago. Resolving

them swiftly and with as little lasting

damage to the company as possible

appears a key priority for Nagle, who

took over as Glencore chief executive

last summer, succeeding Ivan Glasen-

berg, who ran the business from 2002.

“We want to put a line under that and

move forward,” Nagle, 47, said yesterday.

The scope of the investigations

suggests that further reputationally

damaging details are likely to emerge

before Glencore can do so.

The justice department investigation

into corruption and money laundering

is looking into Glencore’s conduct not

only in Nigeria but also in Venezuela

and in the Democratic Republic of

Congo. A separate investigation by the

US Commodity Futures Trading

Commission, announced the following

year, covers allegations of market

manipulation. Glencore is also subject

to a bribery investigation by the Serious

Fraud Office in Britain and an investi-

gation by Brazilian authorities linked to

Operation Car Wash, which relates to

bribery allegations involving Petrobras,

the Brazilian oil group.

Glencore said it was setting aside a

provision of $1.5 billion for its best

estimate of the costs it would incur to

resolve these investigations, which it

hopes to do this year. That will still

leave two others: one by Swiss author-

ities for failure to have measures in

place to prevent alleged corruption,

Analysis

A

s high energy prices

cause misery for

consumers and many

businesses across

Europe, Glencore

emerged yesterday as a clear

corporate winner from the crisis

(Emily Gosden writes).

“Net net, it certainly has been

positive for our business,” Gary

Nagle, the chief executive, said.

The ‘net net’ caveat is because

Glencore did suffer some

downsides: its mining business

booked about $900 million in

increased costs, at least half of

which stemmed from higher

energy prices. Its zinc smelters in

Europe were “massively

impacted by the surge in gas

prices”, Steven Kalmin, the chief

financial officer, added.

However, Kalmin, 51, said this

was “dwarfed” by the benefit that

Glencore enjoyed from selling

commodities at higher prices,

which delivered $4.9 billion of

increased earnings for energy

commodities alone. The lion’s

share, $4.5 billion, stemmed from

higher prices for thermal coal

burnt in power stations, up

125 per cent year-on-year. Kalmin

said there was also a “meaningful

turnaround” in its small oil

production business with Brent

crude prices up 65 per cent.

In addition, Glencore’s traders

were able to cash in on swings in

energy prices, albeit making a

fifth less from energy trading

than during the “exceptional”

conditions of 2020. Nagle said it

had “been able to take advantage

of ” dislocations and moves in

power, gas and oil prices.

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tf B i E

The coal-fired plant at Ratcliffe-on-

Soar scooped a £31 million contract