Meloy Energy sold fixed price contracts to customers in southern Norway at very low prices. Now the company is in crisis and is asking customers for help to avoid bankruptcy.
“We were wrong when we estimated that power prices would not rise as violently and quickly as we have seen over the past year. Many of the favorable fixed price contracts we sold are now costing Meli Energy huge losses.”
The power company wrote this in a message to its customers on Wednesday.
For a brief period in March, Meloy Energy sold fixed-price contracts in southern Norway at prices far below current electricity prices. Overnight, 800 customers in the south must have signed up to a more favorable contract NRK This refers to the letter originally sent by Meli Energy.
The company is now warning that it could go bankrupt within a short period of time due to the deal.
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– Too big a risk to take
“Meloy Energi cannot survive the winter if we must continue to provide electricity to our customers who have entered into the relevant fixed price contracts,” the company wrote.
– The volume of fixed-price contracts is so large that if prices rise again to the level they were in September, that would be too big a risk for a small company, says Rolf Inge Schleipnes, head of Meloy Energy. E24.
He explains that the company is now offering customers a voluntary solution.
The solution sought by the company is to buy the relevant customers out of the contract.
– If we do not achieve this, the company is in a situation of bankruptcy, says Sleipnes.
It is a relatively small electricity company in Meløy, Nordland.
– It is a big responsibility. We provide excellent employment and contribute income to our owner: the Municipality of Meloy. We have over 30 employees and approximately 7,000 electric customers. We manage public funds. So it’s important to find a solution that’s acceptable to both the company and the customer, says Sleipness.
In a letter sent to its customers, Meli Energy offers compensation in this way:
“What we at Meløy Energi AS offer you with a fixed price contract is the following:
Based on your expected annual normal consumption between 20,000 kWh and 30,000 kWh and the remaining term of the contract, we pay you once:
By entering into this Agreement, customers will be transferred to the Company’s Spadoris Agreement without a lock-in period.
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To deliver the promised electricity to customers in southern Norway, the company must buy power at a higher price and then sell it at a fixed price. This is currently causing huge losses to the company.
Meloy Energy also warns that if the company goes bankrupt, customers with fixed-price contracts could lose them.
– No one predicted what happened to prices in 2022. As leader, I dare not commit myself to repeating the same mistake – which will happen if, as many predict, prices rise again throughout the fall and winter. Sleepiness says it will be a while until they wake up again.
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Meloy owns the Municipal Power Company. E24 tried to get a comment from the municipality’s mayor, Sigurd Stormo, without success. to do Nordland Newspaper He says bankruptcy would negatively affect the municipality.
– There are many sides to this case. It is also serious that you are losing the equity that the municipality has built up. It is the traditional Friday of the municipality of Meli, so it is clearly a crisis.
The Consumer Protection Commission said in a statement in the letter that it had no recommendations for consumers on whether to accept the deal.
“Nevertheless, the Norwegian Consumer Protection Authority has had a close and positive dialogue with Meloy Energi AS, and we consider that customers are well taken care of by the company offering customers this offer,” it continues.
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