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Kwasi Kwarteng today suggested people should be hoping for a warm autumn to ease gas prices – as ministers were slammed for refusing to boost storage capacity years ago.
Dragged back to be grilled by MPs on the crisis, the Business Secretary stressed the weather is the ‘single most important determiner’ of costs. The comment came hours after Boris Johnson made a speech at the UN warning of the dangers of climate change.
But he repeated that there will be no ‘reward for failure’ bailouts for collapsing energy firms, amid warnings that big suppliers will soon come ‘cap in hand’ for support.
Mr Kwarteng has admitted there are no guarantees that gas prices will go back to previous levels, despite the government striking a deal to stave off a shortage in CO2 threatening to cause food shortages.
As the problems bite, there have been calls for VAT to be cut on energy bills while ministers are believed to be looking at a windfall tax on fatcat energy firms profiteering.
Meanwhile, there are complaints that ministers did not heed pleas to increase the UK’s gas storage capacity – which could have given more time to handle the pressures.
Dragged back to be grilled by MPs on the crisis, Business Secretary Kwasi Kwarteng stressed the weather is the ‘single most important determiner’ of costs
Two more energy firms with a combined 800,000 customers, Avro Energy and Green Supplier, went into administration yesterday. Dozens of other companies are under threat including Bulb, which supplies 1.7million homes
Millions of families face paying more than £400 extra as the ongoing crisis causes further suppliers to collapse.
Two more energy firms with a combined 800,000 customers, Avro Energy and Green Supplier, went into administration yesterday.
Dozens of other companies are under threat including Bulb, which supplies 1.7million homes.
Customers on cheap tariffs with failed firms face being bumped up to the capped rate of £1,277 – a rise of at least £400.
Energy watchdog Ofgem described the situation as ‘unprecedented’ and confirmed bills would rise further.
The bleak warning came as food chiefs said supply problems caused by shortages of drivers and farm workers were deepening.
‘Our concern is that the pictures of empty shelves will get ten times worse by Christmas and then we’ll get panic buying,’ said Andrew Woolfenden of Tesco.
Twelve industry groups, led by the National Farmers’ Union, predicted the situation would get worse without a new visa regime to draw in foreign workers.
Customers with failing energy firms will be switched to new suppliers charging much higher tariffs, which is likely to add at least £400 extra to the cost of heat and light.
The chief of Green, Peter McGirr, told the BBC this morning that he had done nothing wrong and bigger suppliers would soon face problems.
Mr McGirr said: ‘You will see larger suppliers feeling the pain as well and they will come cap in hand for a bailout.’
In the Commons, Labour MP Rachael Maskell, who represents York Central, said: ‘The rise in energy prices will disproportionately impact people living in the North because it is colder during the winter in the North.
‘So what assessment has he made of the regional disparities and how is he going to mitigate against that?’
Mr Kwarteng replied: ‘I think the honourable lady raises a very fair point and clearly in terms of the gas price the single most important determiner of it is the weather, and she’s absolutely right.
‘That’s why we’ve got schemes like the Warm Home Discount and that’s why we’re absolutely focused on protecting the most vulnerable customers, wherever they are in the UK.’
The Business Secretary insisted the industry and market will find the solution to the energy crisis.
Responding to an urgent question, he told the Commons: ‘The Government has been clear that protecting consumers is our primary focus and shapes our entire approach to this.
‘We will continue to protect consumers with the energy price cap.
‘The solution to this crisis will be found from the industry and the market, as is already happening, and the Government – I repeat – will not be bailing out failed energy companies.’
Mr Kwarteng maintained the price cap will remain in place.
George Grant of Stag Energy, said he had tried but failed to get support for the Gateway Project just off Barrow-in-Furness (pictured a disused storage facility in London)
George Grant of Stag Energy, said he had tried but failed to get support for the Gateway Project just off Barrow-in-Furness.
‘The proposal was for a salt cavern gas storage facility in what’s been acknowledged by the British Geological Survey as the best salt structure for such a service in the UK,’ he told BBC Radio 4’s Today programme.
‘It was about 12 miles off the coast. The philosophy behind this is that you create caverns within the salt and it’s a very good medium to store gas.’
But he said they had ‘finally given up’ on getting the project to go ahead.
‘In 2004, when we first spoke to the government, there was a lot of interest in new gas storage. We got to the financial crash in 2008 when credit requirements on long-term contracts became much more challenging.
‘It was at that point that we really started to engage more with the government about potential support mechanisms or some form of intervention to ensure there was adequate security of supply in the gas sector.
‘The government, in their wisdom, chose to run with a just in time approach. There is on an annual basis plenty of gas around the world and lots of liquid gas being shipped around, but the challenge we’re seeing at the moment is a confluence of events including low wind production and the subsequent high demand for gas, supplies being drawn into China and the fertiliser plants going off.
‘As a result there has been a shortage of supply and prices have risen accordingly.
‘Additional storage in the UK would have certainly helped in this situation.
‘The message we’ve given to the government is that you can’t turn around when there is a crisis and call for a facility like this. The lead time is about ten years from getting sufficient encouragement and structure around financing to actually building it.
‘Energy infrastructure is a long term business that goes beyond election cycles.’
At least 1.5million consumers have seen their suppliers go to the wall in recent weeks after the energy sector was hit by rocketing global wholesale gas prices.
Business minister Paul Scully confirmed there is pressure on the energy price gap, which he said is saving dual-fuel energy customers around £100 per year, but that it will be up to the regulator Ofgem to determine if it should rise.
The cap is currently due to next be reviewed in April.
Mr Scully told Sky News: ‘This is all part of the conversations that Ofgem will set that cap at, because supply prices are based on a number of factors.
‘Clearly, as Government, we need to make sure we are planning for the worst-case scenario because we want to make sure we can protect consumers.’
Pressed on what the worst-case scenario looks like, he added: ‘That it goes on for longer than a short spike. I can’t give you a figure now.’
Source: Daily Mail
