Surging gas prices force Government to quell fears over energy price cap rises
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As gas prices surge, the Government has promised to maintain the energy price cap in order to protect “the elderly and vulnerable”.
In a joint statement, energy regulator Ofgem and Business Secretary Kwasi Kwarteng admitted the high gas prices are “a cause of concern” for consumers.
But they added that supply wasn’t the issue, merely the high cost of gas in the current wholesale market.
Gas prices have reached record highs due to a number of factors. Global demand has risen significantly as economies open up due to the ease in Covid-19 restrictions and a cold winter last year, means the gas market is facing reduced capacity.
This, in combination with lower than usual gas supply from Russia and the rescheduling of maintenance projects from 2020 to this year have caused wholesale gas prices to shoot up by 250 per cent since January, according to industry group Oil & Gas UK.
“This morning [Monday 20 September] we hosted a roundtable with leading energy suppliers and consumer groups to hear about the challenges they currently face,” the statement reads.
“There was overarching consensus among meeting participants that the top priority must be ongoing support for energy customers, especially the elderly and vulnerable.
“In the event an energy supplier fails, we are committed that consumers face the least amount of disruption possible – and there are clear and well-established processes in place to ensuring this is the case.
“In the coming days, we will also meet with smaller and challenger energy suppliers and set out the next steps for protecting consumers, businesses and energy suppliers from these global prices rises. Central to any next steps is our clear and agreed position that the Energy Price Cap will remain in place.”
But while the energy price cap has been confirmed to stay for now, Kwarteng has said that a further rise is possible next April. He also confirmed to the House of Commons that the Government would not bail out energy firms.
Some analysts have 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.
Last week, wholesale electricity prices also soared after a fire at an interconnector linking the French and British power networks.
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