U.K. government to hold third day of crisis talks amid gas prices

Bloomberg energy companies and U.K. government will hold a third day of crisis talks as a surge in gas prices threatens to squeeze more suppliers out of business and cause consumers to collapse.

Business Secretary Kwasi Kwarteng warned Sunday that with suppliers under pressure, the government has a plan to put a special administrator in place in the event of companies failure. He held a discussion with the energy industry on Monday to chart a path forward.

The meeting comes after talks with companies including EDF Energy and Centrica Plc, Britain's biggest supplier, as well as two gatherings with U.K. energy regulator Ofgem over the weekend.

Rising energy bills cause concerns about inflation as well as possible hardship for millions of lower-income Britons over the winter. Seven energy suppliers in the U.K. have failed this year and there are concerns that more will do so as prices rise, exposing unhedged companies who have sold energy to customers at lower levels than they can buy in the market now.

In the U.K., gas prices almost tripled in this year due to a supply crunch, sending some industrial users to reduce production and forcing ripples throughout the food-supply chain

Ofgem continues to work closely with government and industry to ensure that consumers continue to be protected while global gas prices are high and will speak further on these issues at the industry round table tomorrow, the regulator said in a statement on Sunday.

The energy industry is demanding a multi-billion - penny emergency package from the government, including a mechanism to absorb potentially unprofitable customers from smaller competitors that have failed, the Financial Times reported on Sunday. A decision had not yet been announced by the paper.

The government and Ofgem plans to create a special administrator to step in if there are no takers for the customers of a failed company, Kwarteng said in a tweeted statement.

Some tech companies are under pressure. Kwarteng tweeted: Ofgem has robust measures in place to ensure that customers do not have to worry, their needs are met and their gas and electricity supply will continue if a supplier fails. The cost is typically shared among energy companies and then pooled on to consumers when an energy supplier goes under. There are also contributions toward renewable subsidies and security of supply measures that all suppliers have to pay. These unpaid bills will be shared around the companies still left.

Ofgem chooses a new supplier for customers after a competitive bidding process, but they can leave at any time. On Sept. 17 for example, EDF was chosen to take on 220,000 household customers of a failed utility point on Sept. 17.

If the current situation continues then there will be a risk the winter becomes one where the market goes back in time and a monopoly returns leaving just a handful of energy suppliers, said Steven Redmayne, Chief Operating Officer of Green Supplier Ltd, a small supplier in northeast England. Kwarteng met on Sunday with Tony Will, Chief Executive Officer of CF Industries Holdings Inc. after the fertilizer company said it was shutting two plants in the U.K. because of high gas prices.

CF Industries makes carbon dioxide C 02 as a byproduct, which has multiple uses in food packaging and transport, as well as in slaughterhouses and medical industry.

We discussed the pressures the business is facing and explored possible ways forward to secure vital supplies, including to our food and energy industries, Kwarteng said.