We’ll keep homes supplied if energy firms go bust, says Kwarteng after Ofgem meeting

We’ll keep homes supplied if energy firms go bust, says Kwarteng after Ofgem meeting
The Business Secretary has pledged the ‘least amount of disruption possible’ among fears soaring gas prices could mean more energy suppliers go bust

The business secretary and the head of the UK’s energy regulator have said that they are committed to ensuring the “least amount of disruption possible” if energy firms collapse amid rising gas prices.

Kwasi Kwarteng and Ofgem chief executive Jonathan Brearley issued a joint statement in which they pledged their “ongoing support for energy customers” as suppliers struggle to remain in business.

When an energy supplier does go bust, Ofgem switches households to another to avoid a gas or energy switch off — but this can result in higher bills.

Several companies have already folded as gas prices soar. Since January, global gas prices have risen by 250 per cent.

“The recent increase in wholesale global gas prices continues to be a cause of concern for consumers, businesses and energy suppliers across the UK”, Mr Kwarteng and Mr Brearley said in their statement.

“We want to be clear that this is not an issue of supply — the United Kingdom benefits from having a diverse range of gas supply sources with capacity that can more than meet demand.

“This morning we hosted a roundtable with leading energy suppliers and consumer groups to hear about the challenges they currently face.

“There was overarching consensus among meeting participants that the top priority must be ongoing support for energy customers, especially the elderly and vulnerable.

“In the event an energy supplier fails, we are committed that consumers face the least amount of disruption possible — and there are clear and well-established processes in place to ensuring this is the case.”

Gas prices have risen amid surging demand as economies rebound from Covid-19. A cold winter has, moreover, left stocks lower, while low winds over summer have meant less renewable energy and more demand for gas.

The UK also has much lower levels of gas stories than many other European countries, largely because storage capacity has been depleted in recent years. It is more reliant on gas which is used to heat the large majority of homes and to generate around 40 per cent of electricity.

Although energy shut offs in individual homes are unlikely, the surge in gas prices is likely to lead to an increase in the price of goods. It has also already caused two British fertiliser plants to shut down which has had a knock-on effect on the availability of carbon dioxide, which is used in farming and other forms of food production.