Gas firms seek help amid higher energy bill fears
The government of the United Kingdom (UK) is considering offering emergency state-backed loans amid fears for struggling companies and soaring energy bills for customers.
Business Secretary Kwasi Kwarteng held crisis talks with industry bosses including Centrica, an international energy services and solutions company and E.On, a European electric utility company, on Monday.
High demand for gas and reduced supply are behind a surge in wholesale prices.
Consumers are protected from sudden hikes through the energy price cap, which is the maximum price they can be charged on a standard tariff.
But that also means energy firms are unable to pass on higher wholesale costs to their customers, which is forcing some companies to go out of business. The UK’s sixth-largest energy company, Bulb, is seeking a bailout, while four smaller firms are expected to go bust in the coming days as a result.
Higher bills
It is understood that Mr Kwarteng is “reluctant” to bail out smaller companies, but is concerned consumers may end up on more expensive tariffs when they are switched to a new supplier if their existing energy provider collapses.
Customers are automatically switched to a tariff – or payment plan – provided by the new supplier. This is a tariff agreed with the energy regulator Ofgem, but it may well be more expensive than the deal they had with the former company, which went bust.
Millions of households in England, Wales and Scotland are already facing a 12% rise in their energy bills from October when a higher price cap comes into force.
Ofgem will review the price cap in February and any changes would come into force in April.
There has been speculation that the energy regulator could lift the cap between now and next year to allow firms to charge customers more to cope with rising wholesale gas prices.
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