Businesses' fears over regular power cuts

Repeated power cuts in the Selby area of North Yorkshire have inflicted tangible revenue losses on local businesses — Selby Golf Club estimates more than £5,000 lost on a single outage and nearby shops and a chip shop report losses in the hundreds to thousands — with one village reportedly seeing 12 outages in 24 hours. Northern Powergrid attributes the outages to network faults and environmental factors, says permanent repairs have been completed and further reliability work and compensation under Ofgem standards are planned, while the local MP is pushing for meetings with the company and parish councils to ensure remediation.

Analysis

Market structure: Localised, repeated outages are a net positive for grid-equipment and specialist services (underground cable repair, vegetation management, transformers, storage) because they create near-term replacement demand and raise the probability of accelerated regulated capex. Public beneficiaries likely include Prysmian (PRY.MI), ABB (ABB.N), Siemens (SIE.DE) and battery/storage suppliers (FLNC, TSLA) while micro hospitality and independent retail face direct cash-losses; public-market impact on large leisure chains is marginal unless outages widen regionally.

Risk assessment: Tail risks include severe weather or a cluster of failures triggering Ofgem enforcement, emergency fines, or an inquiry that forces re‑pricing of utility RABs; probability low-moderate but impact high (could move regulated-utility multiples by 10–20%). Immediate (days) effects are idiosyncratic reputational losses; short-term (1–3 months) expect local repair contracts and a Feb 2026 stakeholder meeting to set tone; long-term (1–3 years) expect higher recurring capex and potential supply-chain bottlenecks for cables/transformers.

Trade implications: Tactical longs in Prysmian and ABB (6–12m) and selective 12–24m exposure to NG.L or SSE.L are justified if regulators accept incremental capex; use 12-month 25% OTM call spreads on equipment names to limit cash and capture a 15–30% upside. Pair idea: long PRY.MI vs short JDW.L (UK pubs) to express infrastructure upside vs consumer exposure; hedge utility longs with cheap 6–9m puts if Ofgem opens formal investigation.

Contrarian angles: The market underestimates small outages’ ability to catalyse regulatory change — equipment suppliers are underpriced relative to potential multi-year orders and 5–15% price increases from constrained supply. Conversely, don’t overpay for utility stocks without explicit regulatory signals; historical parallel: post‑storm capex cycles (2013–15) rewarded suppliers far more than network owners. Unintended consequence: faster distributed storage adoption could cap long-term load growth, creating a 3–5 year structural offset to utility earnings.

Key Decisions for Investors

• Establish a 1.5% portfolio long in Prysmian (PRY.MI) and a 1% long in ABB (ABB.N) with a 12-month target of +20% and stop-loss at -10%; scale an additional 0.5% on any >5% intraday dip.
• Initiate a conditional 2% position in National Grid (NG.L) or SSE (SSE.L) (split) if Ofgem or company guidance within 60 days signals a >=5% increase in near-term distribution capex; hedge with 6–9 month 5–10% OTM puts sized at 25% of the long notional.
• Buy 12-month 25% OTM call spreads on PRY.MI and ABB.N sized to 0.5–1% notional each to capture asymmetric upside from accelerated repair/upgrade contracts while limiting premium outlay.
• Short 1% of JD Wetherspoon (JDW.L) or small-cap UK leisure exposure to express consumer vulnerability to operational shocks; protect the short with 3–6 month call hedges if headlines show rapid compensation payments or regulatory relief.
• Monitor: attend/track the Northern Powergrid–parish councils meeting in Feb 2026 and any Ofgem announcements in the next 30–60 days; if Ofgem opens a formal investigation or mandates higher guaranteed-standards compensation, increase grid-equipment longs by +1–2% and trim consumer/leisure shorts by half.