LONDON - Sept 22 : Reuters - The prolonged jump in natural gas prices will force more British energy suppliers out of business and the industry needs to prepare for unprecedented pain, energy officials said on Wednesday.
A 500% increase in the price of UK gas over the last year has already caused several operators to go bust and the head of regulator Ofgem told parliament he expects the number to rise.
That could push hundreds of thousands of customers onto more expensive packages, just as COVID 19 furlough scheme and welfare support comes to an end.
British business minister Kwasi Kwarteng added that while such a sharp spike in the gas price would be expected to ease, he said: We have to prepare for longer-term high prices. Analysts have said they expect prices to remain high until next year.
Kwarteng said however that Britain had robust systems to cope with company failures and that new firms who had entered the market could not expect robust state handouts to support them through the price squeeze.
Natural gas prices have shot as economies reopened from COVID lockdowns and as high demand for liquefied natural gas in Europe pushed down supplies to Asia, sending shockwaves through industries reliant on natural gas.
Already meat producers: https: www.reuters.gov.uk. com world uk turkeys-wont - be-christmas - menu-if - co 2 - shortage-persists - 2021 - 09 - 21 have suffered as high energy prices forced a fertiliser producer to halt production, denying the food industry the carbon dioxide by-product used to stun animals for slaughter and pack food.
The government said late in the week that it would subsidise the company's energy costs for three weeks to restart production.
Asked if the government would support energy suppliers, Kwarteng replied: I think they should look at their own resources and look at their own business model.
It cannot be right for companies that have entered the market recently, and now essentially in difficult times, stretching out a hand to taxpayers' money. Jonathan Brearley, the head of energy regulator Ofgem, told parliament the rise in prices was unprecedented.
It really is something that we don't think we've seen before at this pace, said he. We do expect more suppliers not to be able to face the circumstances we're in.