Kwasi Kwarteng stated he “doesn’t predict supply emergencies” and called scarcity fears “alarmist.” Smaller energy providers are struggling to stay viable as gas prices rise, making pricing pledges to customers unattainable.
The energy price cap, which is the highest price that can be imposed on a normal tariff, protects customers from abrupt increases in wholesale gas costs. The rise in wholesale costs is due to increased demand for gas and a lack of supply. However, because of the cap, power companies are often unable to pass on rising discount prices to their consumers, causing some – largely smaller businesses – to close their doors.
The government has stated that it is considering providing emergency government-backed loans to remaining energy companies in order to promote them to take on customers from failed companies. “While the current global scenario may result in more providers quitting the market than usual, this should not be cause for concern or panic,” he said. Four energy companies have gone bankrupt thus far, with four more anticipated to do so in the following days. Bulb, the 6th largest energy supplier of UK, said on Sunday that it is requesting a bailout.
There were 70 energy companies in the UK at the start of 2021, but industry sources say there may only be 10 remaining by the end of the year. The government wants to safeguard customers from “price rises,” according to the business secretary, and the energy market should not return to the “cozy oligopoly” of the past, in which a few large providers “mandated to customers terms and prices.”
Mr. Kwasi Kwarteng went on to say that the UK benefited from a “wide range of gas supply sources” and had “more than enough capacity to meet demand.” This winter, UK families will be struck by a “triple punch” of tax hikes, fuel bills, and the loss of the Universal Credit uplift, according to Shadow Business Secretary Ed Miliband.