There is “absolutely no question of the lights going out” this winter amid soaring energy prices, the Business Secretary has said.
However, energy company bosses have said that the outlook for the industry is “looking bleak” with wholesale prices for gas surging by 250% since January - with a 70% rise in August alone.
‘There will be no three-day working weeks’
Kwasi Kwarteng, addressing MPs after holding crisis talks with the industry on Monday amid fears more small suppliers could go to the wall, said it was “alarmist” to suggest that people would not be able to heat their homes in the colder months, as he assured that the UK’s energy supply had “sufficient capacity” to meet demand.
Speaking in the Commons, Mr Kwarteng said Britain has a “diverse range of gas supply sources”, adding: “We have sufficient capacity, and more than sufficient capacity, to meet demand and we do not expect supply emergencies to occur this winter
“There is absolutely no question of the lights going out or people being unable to heat their homes. There will be no three-day working weeks or a throwback to the 1970s.
“Such thinking is alarmist, unhelpful and completely misguided.”
What does it mean for customers?
He confirmed the energy price cap would stay in place to ensure consumers are protected from sudden price hikes.
A spokesman for the Prime Minister said: “The price cap remains in place, as I say, to protect consumers from sudden increases in global gas prices and it will save them money this winter.”
Asked whether the cap could change between October and the next review date in April 2022, he added: “I’m not aware of any proposed change to the price cap.”
In a series of tweets Mr Karteng said: “In any scenario, we will ensure UK consumers have continuity of supply – through a supplier of last resort or a special administrator if needed.”
What is the effect on suppliers?
The energy price cap could have a detrimental effect on suppliers.
The cap puts pressure on suppliers, particularly smaller companies, who are unable to pass on the increases in wholesale gas prices to their customers.
However, No 10 have said there are no current proposals to change the energy price cap.
Four firms have already folded, one being People’s Energy earlier this month, and there are fears that more could follow.
Analysts have predicted that UK energy companies could be reduced to three-quarters over the coming months, leaving as few as 10.
What’s been said?
Peter McGirr, chief executive of small energy firm Green, feels that “without any support mechanism being put in place by Government, it’s unlikely we will see the winter through.”
Foreign Office minister James Cleverly has stated that the Government is not ruling out bailing out firms and are “considering a range of options.”
Whether the Government would consider scrapping green levies to bring down bills, No 10 said they were an important part of reducing carbon emissions.
Why have gas prices increased?
The rise in price has been blamed on a number of factors:
- a cold winter which left stocks depleted.
- high demand for liquefied natural gas from Asia.
- a reduction in supplies from Russia.
Mr Cleverly and Boris Johnson have both focused on the pandemic as being the main factor. Speaking to broadcasters on the tarmac of New York’s JFK airport overnight, Prime Minister Boris Johnson said: “This is really a function of the world economy waking up after Covid.”
However Emma Pinchbeck, head of Energy UK, told Times Radio the issue could not be blamed on one factor.
What’s to be expected?
Producers warn that supplies of meat, poultry and fizzy drinks could all be hit due to a shortage of carbon dioxide (CO2).
Nick Allen, chief executive of the British Meat Processors Association, has said the country could be two weeks away from British meat disappearing from supermarket shelves due to the shortage.
However, No 10 has insisted the UK has “an incredibly resilient supply chain when it comes to food and we’re well prepared to handle any potential disruptions.”
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