Fears remain over the future of a number of UK energy providers due to surging gas costs as it was confirmed the price cap must “remain in place”.
Business Secretary Kwasi Kwarteng held a crisis meeting with the industry then announced to the Commons that ministers would not be bailing out energy firms and that the price cap would be “staying”.
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‘Energy price cap to stay’ says Minister
In a joint statement issued late on Monday evening, Mr Kwarteng and Ofgem chief executive Jonathan Brearley confirmed they had taken a unified position over the price ceiling continuing.
“Central to any next steps is our clear and agreed position that the energy price cap will remain in place,” they said.
Mr Kwarteng had earlier told MPs the cap saves 15 million households up to £100 a year, adding: “It’s not going anywhere.”
It comes as the Daily Telegraph claimed some companies present at the meeting – attended by the likes of Scottish Power, Octopus, E.ON and EDF – called for the cap to be scrapped.
Some analysts have reportedly predicted the UK’s energy companies could be drastically reduced over the coming months, leaving as few as 10 if the gas crisis continues.
The energy price cap, following a review in August, is already set to rise.
From 1 October, those on default tariffs paying by direct debit face an increase of £139, rising from £1,138 to £1,277.
Prepayment customers will see a higher increase of £153, taking their annual bill from £1,156 to £1,309, according to Ofgem data.
Behind the call for industry support are surging wholesale gas prices which have increased by 250% since January, leading to the demise of some smaller energy firms.
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How to deal with spiking gas and electricrity bills amid the energy crisis
The soaring prices show no sign of abating, with Bloomberg reporting the UK natural gas wholesale price had settled at its highest ever closing price on Monday.
Addressing MPs, Mr Kwarteng said there needed to be an acceptance that gas prices “could be high for longer than people anticipate”.
But he called fears of a three-day working week “alarmist”, adding: “There is absolutely no question of the lights going out or people being unable to heat their homes.”
Energy suppliers are understood to be privately talking to the government about backing loans or a “bad bank”‘ style solution to a potential collapse of dozens of energy companies.
The rise in gas prices has been blamed on a number of factors, including a cold winter which left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.