UK gas shortage: price tripled and government holds emergency meetings

Britain’s business secretary seeks to avert an energy crisis by holding emergency meetings with leaders in industry and consumer groups on Monday as the The UK government is looking for ways to support businesses threatened by rising natural gas prices.

Kwasi Kwarteng said on Sunday evening that The UK energy regulator is said to ensure that gas and electricity continue to flow to customers in the event of failure of their energy supplier. If necessary, the government will appoint a special administrator to guarantee supplies until a company can be rescued or its customers are moved to new suppliers, noted.

Four small energy companies have been in big trouble in recent weeks due to the sudden rise in gas costs around the world. Wholesale gas prices in Britain have tripled this year as the global economic recovery from the COVID-19 pandemic increases demand as well as storms in the United States. In addition, planned maintenance has reduced supplies.

British authorities stress that Britain’s domestic gas production, as well as imports from Norway, mean that there is sufficient supply to meet the country’s energy needs.

“Energy security will always be our top priority,” Kwarteng tweeted Sunday. “I am convinced that security of supply can be maintained in a wide range of scenarios.”

The Times of London reported that the cost of supporting the industry can ultimately cost taxpayers billions of pounds.

One option offered by some large energy companies is to transfer customers from failing suppliers to a temporary government company that could be sold at a later date, UK media reported. This proposal would be similar to the so-called bad banks that were used to house the high-risk assets of some lenders during the global financial crisis.

Another option is for the government to provide loan guarantees to large energy suppliers to absorb customers of bankrupt companies. The costs of such a program would ultimately be recovered through higher energy bills.

“It’s really a function of the wake-up call of the global economy after COVID,” Prime Minister Boris Johnson said upon arriving in New York on Sunday. “We have to try to fix it as quickly as possible, make sure we have the supplies we want, make sure we don’t allow the businesses we depend on to go bankrupt. We will have to do whatever we can. “

UK consumers are already feeling the impact. Gas and electricity costs for many people will rise next month after regulators approved a 12% price hike in August for customers without such contracts.

Peter Smith, director of policy and advocacy for the National Energy Action energy poverty charity, said that Rising energy prices couldn’t come at a worse time for consumers who are already grappling with the economic impact of the pandemic.

Overall, consumer prices rose at the fastest rate recorded in the year through August, bringing the inflation rate to 4.1%, the Office for National Statistics.

Before the pandemic, around 13% of households in England and 25% in Scotland were classified as energy poor, defined as spending a high proportion of family income to keep their homes at a reasonable temperature.

“Millions of people across the UK are already in crisis and suffering the desperate consequences of not being able to heat their homes,” Smith said. “The UK government and the energy regulator urgently need to tackle the toxic impact this will have on physical and mental health across the UK this winter.”

(with AP information)

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