Kwarteng says government will not bail out energy firms as more collapses expected
Kwasi Kwarteng has said the government will not bail out collapsed energy firms as global shortages push more suppliers to the brink.
The business and energy secretary said “we may well expect to see further companies exiting the market over the coming weeks”, after holding crunch meetings with energy firms today.
Wholesale gas prices are up by 250 per cent since January and seven British energy companies have folded this year under price pressure.
This includes two, Utility Point and People’s Energy, which went bust last week.
“The government will not be bailing out failed companies, there will be no rewards for failure or mismanagement, the taxpayer should not be expected to prop up companies which have poor business models and are not resilient to fluctuations in price,” Kwarteng said.
“We must ensure the energy market does not pay the price for a small minority of companies and that the market still maintains the competition which is a feature of today’s current system.”
Natural gas prices have soared worldwide due to shortages in supply, particularly from wind power, and a reduction of energy exports from Russia to Europe.
The burgeoning crisis has prompted fears that there could be widespread UK power outages and food shortages over winter.
Kwarteng told MPs that the UK’s relative energy independence, 50 per cent is produced domestically, means the UK should have enough supplies to stop extensive winter shortages.
He also said that the government will not scrap the energy price cap, which limits the amount energy suppliers can charge.
“We have sufficient capacity and more than sufficient capacity to meet demand and we do not expect supply emergencies to occur this winter,” he said.
“There is absolutely no question of the lights going out or people unable to heat their homes. There will be no three-day working week or a throwback to the 1970s – such thinking is alarmist, unhelpful and completely misguided.”
Shadow business secretary Ed Miliband called on the government to diversify the government’s energy supply by increasing the UK’s reliance on renewable energy.
“Above all there is not yet enough of a clear plan from Government for how we meet net zero with affordability and security,” he said.
“He will have read the climate change committee’s appropriate report this summer where they said it is ‘hard to discern any comprehensive strategy’.
“Isn’t it the truth that there is a direct line from delay, dither and failure to the issues we face today?”