Ecotricity chief Dale Vince has revealed he would be handing Russian energy giant Gazprom a multi-million pound gain if he ditched the contract prematurely.
Vince admitted it would cost too much to end the deal early, but confirmed he would not renew it.
He said: “If we were to break these contracts early we would be handing them a multi-million pound gain – the opposite of the intended impact of a boycott. So we’ll see these contracts though and then move on.
“Like many companies, we’ve been asked in recent days what commercial links we have with Russian companies – in our case the main focus has been on Gazprom, the Russian gas company that supplies 40% of Europe’s gas and about 5% of the UK’s. We have a trading relationship with them, that much we knew, they are one of about a dozen counterparties with whom we trade energy (electricity and gas).
“We dug into the numbers in our trade book – turns out 5% of our gas is bought in advance (hedged) with Gazprom, for the next 12 months. We looked at the implications of breaking that contract. We would incur pretty massive penalties – the rule of law still applies here (there must be some irony in that) – of approaching £10m. And they can easily sell that gas for more than we have agreed to pay for it. A double benefit when the intended effect of a boycott is a penalty. We concluded the best thing to do is see the contract through and then move on.
“We trade energy with about a dozen different companies, one of those is Russian-owned Gazprom with whom we’ve signed contracts for 5% of our energy requirements over the next 12 months.”