Is your energy firm about to go bust and what can you do about it?

Is your energy firm about to go bust and what can you do about it? How five suppliers have already collapsed and 39 are at risk of going under meaning average bill could DOUBLE by April

  • The crisis is expected to hit millions of Britons after wholesale energy prices went from a record low last May 
  • Up to 700,000 customers at five energy companies to have folded in the past month likely to see bills rise
  • Those £850-a-year could now face a hike to £1,277 from October 1 and may be paying £1,500 by next April
  • Experts predict that the number of UK energy companies could fall from 49 to 10 in the next 12 months 

Britain’s energy crisis: What happens if my supplier goes bust and will I end up paying more for gas and electricity? 

The price of gas has soared in recent weeks, putting several energy suppliers out of business and forcing some factories to stop production.

The price of wholesale gas has surged by 250% since the beginning of the year and added 70% just since August, according to figures from Oil & Gas UK.

– Why are wholesale gas prices soaring?

There are many reasons for this. The economy is opening up from its pandemic lows, so demand for gas is increasing.

Europe is also about to start entering winter, when gas demand will be highest, especially from countries such as the UK which overwhelmingly rely on gas to heat homes.

But a perfect storm of other problems has also hit the sector. Supply from Russia has dried up recently, and demand is high in Asia, which is putting pressure on international markets.

In the UK, several gas platforms in the North Sea have closed to perform maintenance that was paused during the pandemic.

In a further stroke of bad luck, cables that import electricity from France were damaged last week, and September has not been a very windy month. These problems have meant that more gas is needed to produce electricity.

– Will my energy bills rise?

It depends what kind of deal you are on. But more than likely. Prices were already set to rise for the 15 million households in Great Britain that are on their supplier’s default tariff because of a major hike in the energy price cap.

Regulator Ofgem had been criticised for the rise, which comes into force on October 1, however the price cap is now one of the better deals on the market.

Many other energy customers are locked into year-long deals which will fix their price for the 12 months of the contract. If your contract is coming to an end shortly you will probably have to change to a more expensive deal.

Ofgem has said consumers can expect an average price rise of £135 this winter. Others say it could be £400 or more depending on how cheap your original deal was.

– Why are energy suppliers going bust?

Simply speaking it is because many have promised to sell gas to customers for less than it is currently costing them to buy.

When they sign a fixed-term deal, households are promised that they will pay the same price for the gas and electricity they use during that entire period.

The energy suppliers expect the gas price to go up and down, and will often give themselves some headroom for rises.

But unprecedented recent price rises mean that a lot of customers are now paying suppliers less for energy than it costs the suppliers to buy that energy. Unsurprisingly this is not a viable business model.

So far five energy suppliers have gone out of business in recent weeks, with some predicting that dozens more could follow before the end of the year.

– What is hedging and why have so many energy suppliers not done it?

The energy suppliers that stay afloat are likely to be those that have hedged – a type of insurance which steps in if prices rise too much.

But like all insurance, hedging costs money. So many suppliers – who are living on razor-thin margins anyway – decide not to. Many of these are now paying the price.

– What should I do if my energy supplier goes bust?

Sit tight. Ofgem will move you to a new supplier. Take pictures of your meters, and download or print out your bills from the old supplier.

If Ofgem moves you to a supplier or a deal you are not happy with, you can then shop around.

If your energy supplier owes you money, your money is protected and you should get it back.

– Will fewer energy suppliers mean a worse deal for households?

Probably. Price comparison websites are showing little in the way of good deals at the moment. Regardless of what wholesale prices are doing, less competition could well mean fewer good deals in future as well. However this remains to be seen.

 

Four out of five UK energy companies are at risk of going bust because of the soaring cost of gas and electricity leaving millions of Britons facing the prospect of paying up to £400-a-year more almost immediately with no hope of a cheaper deal, experts warned today. 

The crisis is expected to hit millions of Britons after wholesale energy prices went from a record low last May because of a lack of demand due to global lockdowns to the highest rates since the 1990s. 

Scott Byrom, Chief Executive Officer of TheEnergyShop.com, told MailOnline the 650,000 customers at the five energy companies to have folded in the past month were likely to be paying around £850-a-year for their energy because of the deals on offer in 2019 and 2020.

But they could immediately face a hike to £1,277 from October 1 due to the energy cap rise and may be paying as much as £1,500 by next April when they are moved to a new provider.

There are concerns that millions more people could be in the same situation after energy consultants Baringa predicted that the number of UK energy companies could fall from 49 to 10 in the next 12 months if wholesale prices remain the same. 

Experts have said that many of the companies that have gone bust brought in customers on ‘dirt cheap’ fixed deals on the back of low prices last year – but now have no hope of making any money so either folded or are seeking a Government bailout.

Ofgem will automatically move customers of Hub Energy, PfP, MoneyPlus, Utility Point, People’s Energy to a new supplier in the coming days with British Gas taking 350,000 of them today and EDF 220,000 last week. Seven firms have collapsed in 2021 in total and many have only been in existence for five years. 

But energy market rules demand that customers whose supplier goes bust must be offered a fair deal by the new supplier – not the same one they had – meaning they are likely to pay significantly more. They will bring whatever credit they have on their accounts to a new provider, however.

Those affected can shop around for a new deal if they are unhappy with their new provider, but last year most energy firms were offering deals at £750 to £850-a-year – today there are now scarcely any deals under £1,200-a-year.

Stacey Stothard was one of 220,000 customer at Dorset-based Utility Point, which has gone bust. She believes her bill will now go up by up to £300 or more.

She told the BBC: ‘It is just like watching the meter go up and up. I did the right thing – not going for the cheapest deal, but choosing a company with a decent customer service record. I tried to protect myself from this turbulence. Now I’ve just had to order a lot of logs for the burner.’

It came as Boris Johnson’s No 10 spokesman refused three times to rule out the energy bills price cap being removed or lifted this winter. 

It is already rising by £139 to stop average standard variable tariff bills going above £1,277 from October 1, but energy experts have said the wholesale price rises mean the cap may have to be raised a further £280 in the new year. 

The outspoken boss of Octopus Energy, Greg Jackson, one of the ten companies expected to survive, has said that ‘idiot companies’ who offered customers rock bottom prices without allowing for rises in global prices ‘don’t deserve’ to survive.

He added: ‘Make no mistake – there are real issues in energy caused by global gas and shortfalls in UK nukes – but the idea of ‘crisis’ is being pumped up by the former Big 6 in order to try to bounce govt and regulators into restoring the cosy oligopoly they used to enjoy’. 

Experts have said that Britain’s energy regulator must take responsibility for the crisis because their decision to open up the market to break up the Big 6’s control of the market has led to too many companies entering the market.

There were just ten in 2006 but this reached 70 in 2018 and is at 49 today, but this could be back at ten again in a year.   

Scott Byrom, Chief Executive Officer of TheEnergyShop.com said: ‘The reality is that Ofgem relaxed the requirements for new market entrants and I don’t believe that they have looked as carefully as they should have at the financial and organisational set up of some of these energy companies as well as their hedging strategies’, adding that he believes the rise of prices has meant that often poorly run businesses have gone bust. 

Boris Johnson last night said ministers were working to stop Britain running out of gas. The Prime Minister insisted shortages were temporary but acknowledged they could persist for weeks or even months.

‘We’re very confident in our supply chains,’ he told reporters while travelling to New York.

‘But in the meantime, we will make sure we work with all the gas companies to do whatever we can to keep people’s supplies coming, to make sure they don’t go out of business, and to make sure we get through the current difficult period.’ 

These are the seven energy firms to have gone bust in 2021. Experts predict up to 39 more could go in the next year. Some of those to fall have only been running for a matter of years since the energy market was opened up hugely in 2014

A graphic illustrating how the three issues are currently affecting the UK and the problems it is causing. The People’s Energy  Company (bottom, middle) is one of the energy suppliers that have already gone bust 

Downing Street today dismissed demands from Tory MPs and energy firms to scrap green levies to avoid the gas crisis triggering a wave of fuel poverty this winter.

The PM is facing pressure from his own side to suspend or axe the ‘stealth tax’ charges on household energy bills to fund subsidies on renewables – which critics say can make up around a quarter of electricity costs.

The calls came amid warnings ministers must act to keep the ‘lights turned on’ with gas shortages driving up prices, and taxpayers facing pumping billions of pounds into stricken energy firms.

Fears are mounting about the consequences of soaring wholesale energy prices – up 70 per cent since last month – that are sending providers to the wall and causing chaos for a range of industries.

Experts say that as well as spiralling bills for household energy, food supplies and even medical procedures are at risk as the pressures cause shockwaves across supply chains. One consultant said the problems are so huge they could ‘easily see a three-day working week’ across affected companies this winter.

However, whether the Government would consider scrapping green levies, a Downing Street spokesman said: ‘We’ve spoken at length and the Prime Minister has spoken at length about the importance of renewable energy sources and his commitment to reducing carbon dioxide emissions here in the UK.

‘I’ll point you to the targets that we have clearly set out with that regard, and that levies an important part of driving our energy supply to renewables.’

The Government is preparing to take over the running of small suppliers on the verge of collapse due to the crisis, which has seen wholesale gas prices increase by 70 per cent in a month. Bulb, an energy provider to 1.7million customers, is reportedly seeking a bailout.

It is exploring raising funds from investors or a potential joint venture or merger with another company, according to the Financial Times. A Bulb spokesman said: ‘From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and lower CO2.’

Last night there were growing fears of gaps on supermarket shelves as ministers failed to achieve a breakthrough in talks over shortages of carbon dioxide. Record gas prices have led to two of the country’s largest fertiliser plants pausing production.

The sites in Teesside and Cheshire, which are run by US firm CF Industries, produce around 60 per cent of the country’s CO2 as a by-product from the manufacture of fertiliser. The gas is vital to the supply of food and is needed by hospitals and the nuclear industry. It is used as a preservative in fresh food packaging and in the transport of frozen goods – in dry ice form.

It is also used to stun chickens and pigs prior to slaughter. Mr Kwarteng yesterday held talks with CF Industries boss Tony Will in a bid to persuade him to restart production.

But Mr Will, who flew into the UK from the company’s headquarters in Illinois, said it was not commercially viable while gas prices remain high. Whitehall officials were last night drawing up possible options to incentivise the firm to restart production ahead of further talks in the coming days.

Mr Kwarteng will today host a round table with the energy industry and consumer groups over concerns about the domestic supply of gas and electricity.

Ministers fear more small power firms could go bust within days – five have already in collapsed in recent weeks. The Business Secretary yesterday finalised contingency plans for what will happen if more suppliers cease trading.

There are concerns that energy regulator Ofgem may be unable to find companies willing to take over customers’ accounts if gas prices continue to rise. If this happens, the Government will step in to take over the running of a collapsed firm until it can be rescued or customers moved to a new supplier. The bosses of some of the biggest energy companies will use their meeting with Mr Kwarteng to urge him to get rid of green levies in customers’ bills.

Eon UK boss Michael Lewis wants the renewable energy subsidies to be funded through general taxation instead. He has said that removing such additional costs is a ‘short-term imperative’ to help consumers during what is ‘going to be a very challenging winter’. British Gas owner Centrica has backed his calls. Ministers last night sought to reassure the public there was no imminent threat to power supplies.

Government climate change chief Alok Sharma told Sky News: ‘The clear message is that there is no immediate concern in terms of supply. We don’t see any risks going into the winter. People should be confident that the supplies will be there and that we will be protecting them in terms of price rises.’

Concerns for 39 of Britain’s energy firms after seven go bust in 2021

The seven energy companies to have gone bust in 2021

Simplicity Energy

Green Network Energy 

Hub Energy

PfP

MoneyPlus

Utility Point

People’s Energy

The ‘Big 6’ energy suppliers (safe)

British Gas

Scottish Power

Npower

E.ON

EDF Energy

SSE – Swalec, Scottish Hydro, Southern Electric and Atlantic

The Big 3 challengers (safe)

Ovo Energy 

Shell Energy 

Octopus Energy

The remaining firms 

Affect Energy –

Atlantic –

Avro Energy –

Better Energy –

Boost Energy –

Breeze Energy –

Brilliant Energy –

Bristol Energy

Bulb Energy –

Co-Operative Energy 

Daligas –

EBICo –

Economy Energy –

Economy Seven Energy –

Ecotricity –

Engie –

Enstroga –

Entice Energy –

ESB Energy –

Eversmart Energy –

Extra Energy –

Fairer Power –

first:utility –

Flow Energy –

Foxglove Energy –

Future Energy –

GB Energy Supply –

Gen4U –

GnErgy –

Go Effortless Energy –

Good Energy –

Green –

Green Energy UK –

Green.Energy 10,000

Green Network Energy –

Green Star Energy 

Gulf Gas & Power 

igloo.energy –

IRESA Limited –

iSupply –

Leccy –

Lumo –

LOCO2 Energy –

M&S Energy –

Nabuh –

npower Select –

Oink Energy –

One Select –

Orbit Energy –

Our Power –

Out Fox the Market –

PFP Energy –

OutFox the Market –

Powershop –

Pure Planet 

Qwest –

Robin Hood Energy –

Sainsbury’s Energy –

Simplicity –

So Energy

Solarplicity –

Spark Energy –

Southern Electric –

Scottish Hydro –

Swalec –

Telecom Utility Warehouse  

Together Energy –

Tonik 

Toto –

Usio Energy Supply Limited –

Utilita Energy 

Yorkshire Energy –

Zog Energy

 

Mr Kwarteng last night said he had been assured by Ofgem boss Jonathan Brearley there were ‘well-rehearsed plans in place to protect the market and consumers’. In a series of tweets, the Business Secretary wrote: ‘If a supplier fails, Ofgem will ensure customers’ gas and electricity supply will continue uninterrupted. Our priority is to protect consumers.

‘If a ‘supplier of last resort’ is not possible, a special administrator would be appointed by Ofgem and the Government. The objective is to continue supply to customers until the company can be rescued or customers moved to new suppliers.’

Mr Kwarteng said he and CF boss Mr Will had explored possible ways forward to secure vital supplies.

Ministers were warned that they must act to keep the ‘lights turned on’ today amid fresh crisis talks over gas shortages – with taxpayers facing pumping billions of pounds into stricken energy firms.

Fears are mounting about the consequences of soaring wholesale gas prices – up 70 per cent since last month – that are sending providers to the wall and causing chaos for a range of industries.

Experts say that as well as spiralling bills for household energy, food supplies and even medical procedures are at risk as the pressures cause shockwaves across supply chains. One consultant said the problems are so huge they could ‘easily see a three-day working week’ across affected companies this winter. 

And Iceland supermarket boss Richard Walker told the BBC this morning that he was ‘shocked’ by how exposed the UK was to disruption. 

‘This is no longer about whether Christmas will be OK,’ he said. ‘This is more about keeping the wheels turning and the lights on so we can actually get to Christmas.’ 

Business Secretary Kwasi Kwarteng has held more discussions with the energy industry amid calls for bailouts, and will make a statement to MPs later. 

Five energy suppliers have gone bust recently. British Gas has agreed to take on an extra 350,000 domestic customers from one of the casualties, People’s Energy.

The Government could provide a loan to other firms taking on their customers, or even effectively nationalise small suppliers on the verge of collapse by appointing a ‘special administrator’.

However, there are concerns that other firms will still refuse to take on the consumers. Other options include creating a ‘bad bank’ to take control of entities that can no longer operate on their own.

No10 has also pointedly refused to rule out changes to the energy price cap, amid concerns it is warping the market.  

The UK’s sixth largest energy company, Bulb, was among those seeking help today.

The FTSE 100 tumbled to a two-month low this morning as gas supply fears combined with rising inflation to send a chill through financial markets.

Energy stocks were also among top losers, with shares of heavyweights Royal Dutch Shell and BP falling 1.5 per cent and 0.9 per cent respectively.

Tory MPs have joined energy firms in demanding Boris Johnson scraps or suspends green levies on consumer bills.

London Mayor Sadiq Khan insisted the government must ensure vulnerable customers are protected from price rises.  

But the PM, who is at the UN general assembly in New York, tried to quell rising panic by insisting the problems should be ‘temporary’. 

He said the energy squeeze was a result of the ‘world waking up from pandemic shutdown’, comparing it to everyone ‘going to put the kettle on at the end of the TV programme’.

Asked whether the Government would consider scrapping green levies, a Downing Street spokesman said: ‘We’ve spoken at length and the Prime Minister has spoken at length about the importance of renewable energy sources and his commitment to reducing carbon dioxide emissions here in the UK.

‘I’ll point you to the targets that we have clearly set out with that regard, and that levy’s an important part of driving our energy supply to renewables.’

A spokesman for the Prime Minister said: ‘I’ve talked about the energy price cap and what it does and why it remains in place to protect customers, as I say, from sudden increases in global gas prices, and it saves them a lot of money during the winter and autumn months when it is colder.’

Pushed on whether he would therefore rule it out, he added: ‘Well, again, as I say, the energy price cap remains in place, and I’m not aware of any change to that at all.’

He said: ‘It’s in place to protect people’s energy bills. That’s what it does, that’s what it has done, and as I say, it’ll continue to do so.’

No 10 insisted the UK food chain is ‘incredibly resilient’ amid warnings a lack of CO2 – a knock-on effect of the gas crisis – could make the situation even worse.

‘We’ve got a highly resilient food supply chain in the UK, we’ve seen that throughout the pandemic, and we will obviously continue to work with industries that are facing issues to ensure that remains the case,’ the spokesman said.

‘As I’ve just said, we have an incredibly resilient supply chain when it comes to food and we’re well prepared to handle any potential disruptions.’ 

Foreign Office minister James Cleverly said he was ‘not going to speculate’ over whether the Government would step in to support energy businesses.

Mr Cleverly told Sky News the Business Secretary had already held ‘very productive’ meetings with industry players.

Asked whether energy companies could be bailed out, Mr Cleverly said: ‘I’m not going to speculate as to exactly how we address this, but we’ve moved quickly and the Business Secretary of State’s already had a series of meetings about this both last week, and over the weekend, and we’ve got a very clear idea of what our priorities need to be in terms of protecting consumers and protecting the security of our energy supply.’

Pushed on whether he was therefore not ruling it out, he added: ‘We are considering a range of options.’ 

Mr Cleverly denied there was any connection between the growing energy crisis and Brexit.

Asked if there was a link, he told LBC: ‘No, no, this is hitting a number of countries around the world and it is – I think the Prime Minister summed up rather well – this is a byproduct of the sudden increase in demand as we come out of Covid.

‘Globally, the UK is in a better position than many countries because, obviously, we have a domestic gas production capability, and our imported gas is from very, very reliable partners like Norway. So whilst this is affecting many, many parts of the world simultaneously, actually the UK is in a better position than many.’ 

In the past month, five suppliers have already been forced to close and analysis by business management consultants Baringa shows that 39 suppliers could also collapse in the next 12 months, The Times reports. 

Bulb, an energy provider to 1.7million customers in the UK, is among the suppliers seeking a bailout amid pressure on the industry.

What is causing the energy price crisis? 

The economy is opening up from its pandemic lows, so demand for gas is increasing.

Europe is also about to start entering winter, when gas demand will be highest, especially from countries such as the UK which overwhelmingly rely on gas to heat homes.

But a perfect storm of other problems has also hit the sector. Supply from Russia has dried up recently, and demand is high in Asia, which is putting pressure on international markets.

In the UK, several gas platforms in the North Sea have closed to perform maintenance that was paused during the pandemic.

In a further stroke of bad luck, cables that import electricity from France were damaged last week, and September has not been a very windy month. These problems have meant that more gas is needed to produce electricity. 

On Saturday, Mr Kwarteng held talks with energy suppliers on and their regulator Ofgem amid fears dozens of companies could go to the wall.       

Today, the country’s biggest power firms, including Eon and Centrica, will also call on business secretary to help Britons by removing the cost of green subsidies from payments. 

Dale Vince, chief executive of green energy supplier Ecotricity, has warned many energy companies will not make it to Christmas and said action must be taken to remove price caps and tax on energy bills while building renewable energy ‘as if there’s no tomorrow’.

Mr Vince told the BBC’s Today programme: ‘We’ve got a shortage of electricity at the same time there’s a global shortage of gas. You can’t fundamentally fix that, it’s a question of what sticking plasters we can apply to get through the winter.

‘The energy market is in crisis anyway. Small suppliers have been going bankrupt at the rate of one in every six weeks for the last two years.

‘There’s two kinds of energy company, those that are hedged – which means they have bought their electricity and gas going forward – and those that haven’t. Those that haven’t are going to go bust.’

He said other energy companies would refuse to take on the customers of collapsed companies because it would be ‘asking for trouble’.

He added: ‘We have fundamental problems in the energy market. We have a price cap that sets the energy price super low which allows a margin of about 2 per cent for energy companies which is suffocating.

‘We’ve got a Government stealth tax amounting to 25 per cent on everybody’s electricity bill which really needs to be removed. And, of course, we’re dependent on foreign markets for oil and gas.

‘We need to build renewable energy as if there’s no tomorrow. In the next 10 years we could go 100 per cent energy independent in our country for electricity and gas.’ 

Fears are mounting about the consequences of soaring wholesale gas prices – up 70 per cent since last month – that are sending providers to the wall and causing chaos for a range of industries. Pictured, empty shelves that usually stock bottled water at a Sainsbury’s supermarket

 The gas is vital to the supply of food and is needed by hospitals and the nuclear industry

Boris Johnson, pictured arriving for the UN general assembly in New York last night, insisted the chaos should be ‘temporary’

Ofgem tracking of the day’s ‘spot’ price on natural gas underlines the sharp rise in costs  over recent months


The warning to Boris Johnson (right) of a potential three-day week evokes memories of the 1970s (left), when there was a titanic battle between the government and unions over power supplies

Last night there were growing fears of gaps on supermarket shelves as ministers failed to achieve a breakthrough in talks over shortages of carbon dioxide (CO2). 

Record gas prices have led to two of the country’s largest fertiliser plants pausing production.

The sites in Teesside and Cheshire, which are run by US firm CF Industries, produce around 60 per cent of the country’s CO2 as a by-product from the manufacture of fertiliser. 

The gas is vital to the supply of food and is needed by hospitals and the nuclear industry. 

It is used as a preservative in fresh food packaging and in the transport of frozen goods – in dry ice form. It is also used to stun chickens and pigs prior to slaughter. 

Nick Allen, chief executive of the British Meat Processors Association, said the country could be two weeks away from British meat disappearing from supermarket shelves.

He told Sky News: ‘The meat industry, in particular the pig and poultry industry, use CO2 for humane slaughter. Eighty per cent of pigs and poultry are slaughtered using that process.

‘CO2 is a by-product of fertiliser. Those plants closed, and they account for about 60 per cent of the CO2 produced in this country. They closed at very short notice with no warning. It really hit us cold.

‘We’re hoping and praying the Government can negotiate with these plants to reopen. But even then, it’ll take about three days to restart.’

Mr Allen said meat manufacturers have said they have between five and 15 days’ supply left.

He added: ‘Then they will have to stop. That means animals will have to stay on farms. That will cause farmers huge animal welfare problems and British pork and poultry will stay off the shelves. We’re two weeks away from seeing some real impact on the shelves.’

Mr Kwarteng yesterday held talks with CF Industries boss Tony Will in a bid to persuade him to restart production. 

But Mr Will, who flew into the UK from the company’s headquarters in Illinois, said it was not commercially viable while gas prices remain high. 

Whitehall officials have been drawing up possible options to incentivise the firm to restart production ahead of further talks in the coming days.

Clive Moffatt, a gas consultant and former government energy adviser, told the Telegraph prices for industry could go ‘through the roof’. 

He said some companies could ‘easily see a three-day working week’ this winter if the situation gets worse.

And Iceland managing director Mr Walker said: ‘This is not an issue that is months away, that is for sure.

‘We are building up our stocks on key lines like frozen meat just to make sure we can deal with any unforeseen issue.

‘At the moment we are fully stocked and our suppliers are OK, but we do need this sorted as quickly as possible.’

Shadow business secretary Ed Miliband insisted the crisis was down to a failure of government planning ‘over the last decade’ – glossing over his own record as energy secretary, 

‘A basic duty of government is to ensure secure, affordable energy supplies for businesses and consumers. It is a fundamental failure of long-term government planning over the last decade that we are so exposed and vulnerable as a country and it is families and businesses that are paying the price,’ Mr Miliband said.

‘The Government must take all necessary steps to ensure stability for customers and do everything in its powers to mitigate the effects of this crisis on businesses and consumers.

‘Yet it is making the squeeze on household finances worse by putting up taxes for working people and cutting Universal Credit.’

Mr Kwarteng will today host a round table with the energy industry and consumer groups over concerns about the domestic supply of gas and electricity.

Ministers fear more small power firms could go bust within days – five have already in collapsed in recent weeks. 

The Business Secretary yesterday finalised contingency plans for what will happen if more suppliers cease trading.

There are concerns that energy regulator Ofgem may be unable to find companies willing to take over customers’ accounts if gas prices continue to rise.

If this happens, the Government will step in to take over the running of a collapsed firm until it can be rescued or customers moved to a new supplier. 

The bosses of some of the biggest energy companies will use their meeting with Mr Kwarteng to urge him to get rid of green levies in customers’ bills.

Eon UK boss Michael Lewis wants the renewable energy subsidies to be funded through general taxation instead. 

He has said that removing such additional costs is a ‘short-term imperative’ to help consumers during what is ‘going to be a very challenging winter’. 

British Gas owner Centrica has backed his calls. 

Tory MP Craig Mackinlay, who heads the ‘Net Zero Scrutiny Group’ of Conservatives, told MailOnline that the situation was ‘extremely serious’ and the UK was facing ‘fuel poverty’ this winter unless Mr Johnson rethinks climate levies.

Why was there a three-day week in the 1970s?  

The UK was plagued by high levels of inflation in the 1970s.

The Tory government responded by capping public sector wages and urging the private sector to do the same.

That provoked fury from unions, including the National Union of Mineworkers, which became increasingly militant. Most of the country’s power came from coal at the time, and industrial action to restrict overtime caused significant problems with generation.

In 1973 Tory PM Edward Heath announced a series of measures to try to eke out reserves, including the Three Day Work Order.

That meant that commercial consumption of electricity was limited to three days a week.

Television broadcasts were to end at 10.30pm every night.

However, after limping on for several months Mr Health lost his majority in 1974.

The Labour government then effectively concluded the dispute by giving miners a 35 per cent pay rise. They received another 35 per cent the following year – but the economic malaise continued and reached another crisis point with the Winter of Discontent in 1979.  

‘The key is we have to remove the green levies because we cannot have these ridiculous prices being passed on to consumers, because we then will have energy poverty this winter,’ Mr Mackinlay said.

‘It is very obvious, we have to get rid of green levies temporarily or permanently. We need rapid structural reappraisal of our dash to net zero.

‘The primary role of government is to keep the show on the road, the lights on, people warm and businesses able to do what they do.

‘And we are getting perilously close to a failure of those primary functions. That does mean considering domestic gas production as far as we are able.

‘And no matter how unpalatable fracking has to be within that frame.’

He added that North Sea Oil should also be exploited as much as possible, gas storage boosted, and nuclear policy clarified after being ‘confused’ for decades.

‘The transition to Net Zero is going to be over a long period of time. Fossil fuels will be part of the mix for a long period of time. So it makes sense to be as domestically secure as we possibly can,’ he said.

‘This is putting into focus the parlous state of our energy policy or lack of it that we have had for 20 years. 

‘Governments of all persuasions have completely taken their eye off the ball for 20 if not 30 years.’

Former Cabinet minister John Redwood said: ‘With a chronic shortage of gas, little wind power and a dangerous dependence on imports he needs to change policy.

‘He needs to persuade the gas industry to open more gas storage. Germany has five times as much and France seven times as much proportionate to demand.The government needs to build a strategic reserve if the industry cannot.

‘He needs to liberate new Uk production from existing fields and stimulate more exploration and development. The UK is going to need a lot of gas for some years to come. It is cheaper, greener and safer to produce our own rather than import.’

Sir John added: ‘The energy market is so rigged by regulation, tax and subsidy it will take government interventions to sort out the current shortages.’

Ministers last night sought to reassure the public there was no imminent threat to power supplies. 

Government climate change chief Alok Sharma told Sky News: ‘The clear message that is coming out of this is that there is no immediate concern in terms of supply. 

‘We don’t see any risks going into the winter. People should be confident that the supplies will be there and that we will be protecting them in terms of price rises. But of course we are not complacent about this.’


Business Secretary Kwasi Kwarteng (right) yesterday sought to persuade CF Industries chief executive Tony Will (left), pictured, to restart production

Bulb energy seeks bailout

An energy provider to 1.7 million customers in the UK is seeking a bailout amid pressure on an industry facing surging gas wholesale prices.

Bulb is working with financial advisory firm Lazard to help secure new sources of funding.

Options being explored include raising funds from investors or a potential joint venture or merger with another company. 

A Bulb spokesperson said: ‘From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and lower CO2.

‘Like everyone in the industry, we’re monitoring wholesale prices and their impact on our business.’ 

Asked about possible problems with food supply, Mr Sharma told Times Radio: ‘The Government is working very hard on all of this… We want to ensure there are not disruptions when it comes to food on shelves and in terms of CO2 available in hospitals and other places. 

‘It’s very important to underline the fact that we do feel that there is a security of supply at this point in time. 

‘We’re not expecting any change in that.’ 

Mr Kwarteng last night said he had been assured by Ofgem boss Jonathan Brearley there were ‘well-rehearsed plans in place to protect the market and consumers’. 

In a series of tweets, the Business Secretary wrote: ‘I understand this will be a worrying time for businesses and consumers. 

‘We are working hard to manage the impact of global gas price rises.

‘Unfortunately, small energy suppliers are facing pressures due to sudden increases in global gas prices… If a supplier fails, Ofgem will ensure customers’ gas and electricity supply will continue uninterrupted. Our priority is to protect consumers.

‘If a ‘supplier of last resort’ is not possible, a special administrator would be appointed by Ofgem and the Government. 

The objective is to continue supply to customers until the company can be rescued or customers moved to new suppliers.’

Mr Kwarteng said he and Mr Will had ‘explored possible ways forward to secure vital supplies, including to our food and energy industries’. 

 

The NEW Winter of Discontent: How Russian-inflated gas prices, two fertiliser plants closing, shortage of HGV drivers and an energy network ‘not fit for purpose’ has created ‘perfect storm’ to cripple UK

Rising natural gas prices, an energy network ‘not fit for purpose’ and a shortage of lorry drivers are creating a ‘perfect storm’ to cripple the UK, experts warned today.

The price of wholesale gas has surged by 250% since the beginning of the year and added 70% just since August as demand increases while the economy opens up, according to figures from Oil & Gas UK.

Amid fears of soaring domestic bills and a ‘three-day working week’, five small energy suppliers have already gone bust, and there are warnings more will follow unless taxpayers stump up billions.

A cocktail of other factors are also at play, including gas supplies drying up from Russia, high demand in Asia, wind turbines not spinning due to still weather conditions and North Sea platforms closing for maintenance that was paused during the pandemic.

Natural gas is required to produce fertiliser, with carbon dioxide as a bi-product. The UK relies on just two foreign-owned fertiliser plants for 60% of its CO2 production – both of which have shut because they cannot break even.

This has in turn hit a food production sector already suffering from a shortage of HGV drivers. It needs CO2 for a wide range of uses including refrigeration, carbonating beer and fizzy drinks and preserving meat.

The gas is also used to stun animals before slaughter. Many abattoirs will not switch to other methods either due to animal welfare concerns or because their equipment is only set up to work with CO2, industry sources told MailOnline.

Any animals not stunned will be culled instead and their meat wasted, two bodies representing poultry and pig producers warned today.

Meanwhile, medics use carbon dioxide during surgery to enlarge and stabilise body cavities, risking the nightmare scenario of some procedures having to be delayed by an NHS that is already struggling to process a huge Covid backlog.

Carbon dioxide could be scrubbed from the air in a process known as carbon capture, but scientists say the infrastructure to produce enough of the element through this method is not in place because it is so expensive.

Today, Iceland boss Richard Walker, expressed his horror that Britain was so reliant on just two fertiliser plants to supply the majority of a substance that is critical to the nation’s wellbeing.

He told BBC Radio 4: ‘What shocked me is that 60% of CO2 production is in two factories that are actually owned by a foreign business who have shut down because of gas prices.

‘This is critical to national security, not just food but also healthcare, and it’s quite perplexing that it’s at the whim of a private enterprise as to whether it’s profitable or not.

‘The government needs to prioritise CO2 to get these factories up and running to limit disruption to food supplies’.

Warning that a crisis is looming, he said: ‘In isolation this is a serious issue but it is compounded by the HGV driver shortage as well. All of this comes as we are working towards Christmas.

‘This is no longer about whether Christmas will be ok. This is more about keeping the wheels turning and the lights on so we can actually get to Christmas.’

He said the CO2 shortage will hit meat products, baked good and chilled products such as salad as well as cans of fizzy drinks and bottled beers. 

CRISIS 1: GAS PRICES SPIKE

– Energy firms go bust 

– Risk of ‘3-day week’  

Business Secretary Kwasi Kwarteng is holding a fresh round of crisis talks with the energy industry today amid fears more small suppliers could go to the wall.

But while industry leaders said more needed to be done, Foreign Office minister James Cleverly would not confirm which measures could be taken.

Mr Kwarteng previously said consumers would be protected from sudden price hikes through the Government’s energy price cap.

However that puts pressure on the suppliers – particularly smaller companies – who are unable to pass on the increases in wholesale gas prices to their customers.

Four firms have already folded and there are fears that more could follow.

Some analysts have reportedly predicted that the UK’s energy companies could be reduced to three-quarters over the coming months leaving as few as 10.

Tory MPs have joined energy firms in demanding Boris Johnson scraps or suspends green levies on consumer bills. 


Business Secretary Kwasi Kwarteng (right) yesterday sought to persuade CF Industries chief executive Tony Will (left) pictured, to restart production at fertiliser plants that produce 60% of the UK’s CO2 supplies 

Today, Peter McGirr, chief executive of small energy firm Green, said ‘the outlook is looking bleak’.

Mr McGirr told the BBC’s Today programme: ‘It is not that I have a bad business model or I have a bad business.

‘We just don’t have as deep pockets to keep going through this crisis. I think that all suppliers are feeling the pinch of this but some of them just have a lot deeper pockets to try and ride out the storm.’

Energy suppliers that are now in financial difficulties 

BULB

The provider to 1.7million customers is working with financial advisory firm Lazard to help secure new sources of funding.

Options being explored include raising money from investors or a potential joint venture or merger with another company. 

A Bulb spokesman said: ‘From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and lower CO2.

‘Like everyone in the industry, we’re monitoring wholesale prices and their impact on our business.’ 

GREEN 

Smaller provider Green today warned it is among the small suppliers facing going bust due to record wholesale prices. 

‘I don’t think we’ll survive the winter if there’s not a material change,’ CEO Peter McGirr told the Guardian. 

The start-up was founded in 2019 and has more than 250,000 customers and 185 employees.

He said: ‘I feel that without any support mechanism being put in place by Government, it’s unlikely we will see the winter through.’

Jonathan Maxwell, CEO and Founder of Sustainable Development Capital LLP, said the crisis was being caused by a ‘number of unconnected issues occurring at once. 

He told MailOnline: ‘The issues include high natural gas prices – the result of a number of factors including winter supply concerns, a storm in the US shutting down a gas supply terminal in Texas, disruption to the UK’s main power cable from France and historic lows in windspeed.

‘This is the latest in a long line of energy disruptions in the UK and provides further evidence that the current energy system is no longer fit for purpose. 

‘A fundamental change is required to ensure a cheaper, cleaner and more reliable energy future that meets the UK’s objectives for COP26.’

Mr Maxwell suggested the centralised nature of the National Grid had exacerbated the problems. 

‘The solutions are relatively simple – reduce energy wastage by generating cheaper, cleaner and more reliable power and heat closer to the point of use, improve energy efficiency, energy storage and backup solutions and enable smarter use of renewable energy sources, which will all reduce the reliance on natural gas.  

‘This serves to reduce the significant generation, transmission and distribution losses associated with a centralised grid, saving money and reducing the carbon intensity associated with large energy-users.’ 

Today, Mr Cleverly said he was ‘not going to speculate’ over whether the Government would step in.

The rise in gas prices has been blamed on a number of factors, including a cold winter which left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.

Lower solar and wind output is another factor driving up prices. The UK and Europe has phased out coal plants in recent years, while less windy weather in recent weeks has lowered their contribution to the grid, driving up gas demand. 

Mr Cleverly said the shortage was due to the pandemic, and told Good Morning Britain: ‘Because the global economy is kind of waking up from this hiatus imposed upon us by Covid, we’re suddenly seeing a surge in demand and therefore surging gas prices that has affected all kinds of parts of the economy, it has had an impact on food production and we are looking to ensure that we protect those food suppliers.’

… and the five energy companies that have ALREADY gone bust in the last two months 

August 9: Hub Energy (15,000 customers, 6,000 domestic and 9,000 business – switched to EON Next).

September 7: PfP Energy (80,000 domestic, 9,000 business – switched to British Gas). 

September 7: MoneyPlus Energy (9,000 domestic – switched to British Gas). 

September 14: People’s Energy (350,000 domestic, 1,000 business – switch yet to be announced). 

14: Utility Point (220,000 domestic – switch to EDF Energy). 

Source: energyscanner.com 

However Emma Pinchbeck, head of Energy UK, a trade association for the energy industry, told Times Radio the issue could not be blamed on one factor.

Speaking to broadcasters on the tarmac of New York’s JFK airport overnight, Prime Minister Boris Johnson said: ‘I think people should be reassured in the sense that yes there are a lot of short-term problems not just in our country, the UK, but around the world caused by gas supplies and shortages of all kinds.

‘This is really a function of the world economy waking up after Covid.

‘We’ve got to try and fix it as fast as we can, make sure we have the supplies we want, make sure we don’t allow the companies we rely on to go under. We’ll have to do everything we can.

‘But this will get better as the market starts to sort itself out, as the world economy gets back on its feet.’

Clive Moffatt, a gas consultant and former government energy adviser, told the Telegraph prices for industry could go ‘through the roof’.

He said some companies could ‘easily see a three-day working week’ this winter if the situation gets worse.  

At the same time ministers are grappling with warnings of potential shortages on the shelves as the knock-on effect of the gas price rise ripples through the economy. 

British Gas has agreed to take on an extra 350,000 domestic customers from collapsed energy firm People’s Energy, regulator Ofgem confirmed today. 

The company went bust last week, leading to Ofgem finding another supplier to take on the firm’s customers.

Outstanding credit balances including money owed to both existing and former domestic customers of People’s Energy will also be honoured.   

CRISIS 2: C02 PRODUCTION PLUMMETS

– Meat production could stop

– Culled animals will be binned

– Surgical procedures at risk 

Producers have warned that supplies of meat, poultry and fizzy drinks could all be hit due to a shortage of carbon dioxide (CO2).

It follows the shutting down of two large fertiliser plants in Teesside and Cheshire – which produce CO2 as a by-product – with the American owners citing the increase in gas prices. 

Scientists Peter Styring and Katy Armstrong, from the University of Sheffield, has said carbon capture could be used to supply the industry but it would be incredibly costly – not least because the technology is in a relatively early stage of development. 

‘It is possible to take CO2 from the atmosphere using a process known as direct air capture,’ they wrote in an article for the Conversation. 

‘There are a number of companies across the world, including one in Switzerland and another in Canada, that can already carry out this process. In theory, it could turn a problem into a valuable resource, particularly in developing countries with little other natural wealth.

‘The problem is the cost. While the amount of CO₂ in the air is damaging the climate, relatively speaking there are so few CO₂ molecules in the air that sucking them out is very expensive. ‘  

Empty shelves at a supermarket in London today. Supermarkets have been struggling to restock certain products for much of the summer 

How carbon dioxide shortage could see operations cancelled 

Medics use carbon dioxide during surgery to enlarge and stabilise body cavities. 

Health bosses have warned that NHS operations face being cancelled due to the CO2 shortage.  

Lord Adebowale, chairman of the NHS Confederation, yesterday urged ministers to ensure the NHS is prioritised for supplies.

He told Times Radio: ‘What I am concerned about – and I think [Business Secretary] Kwasi Kwarteng and others will be focused on this – is making sure there’s enough CO2 for the NHS.

‘CO2 is used in a number of interventions in the NHS – invasive surgery and endoscopy for instance. Stabilising body cavities so that surgeons can see what’s going on inside.

‘So we have to prioritise the NHS in all this because otherwise people will suffer.

‘But what it does really show is how interconnected it all is and we have to look at things systematically. It’s not just one thing, it’s a number of things.’

The NHS Confederation represents the healthcare system in England, Wales and Northern Ireland.  

On Sunday, Mr Kwarteng met with Tony Will, the global chief executive of CF Industries, the UK’s biggest supplier of CO2 and the owner of the two fertiliser plants.

He said they had discussed the pressures the business was facing and ‘explored possible ways forward to secure vital supplies, including to our food and energy industries’.

Today, meat processing firm Cranswick warned it may have to half production. 

Carbon dioxide is needed to stun animals. It is also injected into meat products to prolong their shelf life. 

The British Poultry Association and the British Pig Association have both warned that animals that cannot be stunned and then slaughtered may need to be culled instead.  

Shockingly, this would mean that the animals are disposed of because processors do not send culled meat to retailers. 

Asked why other methods beyond CO2 could not be used, a meat industry source told MailOnline: ‘It’s all to do with animal welfare. 

‘Even within the C02 market it’s a certain grade of CO2 that’s used. It’s about making sure that the most humane methods are used.’ 

A second source said many abattoirs also did not have the equipment to carry out alternative culling methods. 

CO2 is also used to keep food at low temperatures. 

Online grocer Ocado said it has been forced to cancel frozen food deliveries due to shortages. 

Nick Allen, chief executive of the British Meat Processors Association, has said the country could be two weeks away from British meat disappearing from supermarket shelves.

Mr Allen told Sky News said meat manufacturers have said they have between five and 15 days’ supply left.

Mr Cleverly said: ‘We’ll continue working with the sector to ensure that there is food on the table and gas in the pipes and that will remain a priority for Government.’

Retailers, manufacturers and food suppliers have reported disruptions due to a shortage of truck drivers linked to the pandemic and Brexit (pictured: empty shelves in London today) 

Health bosses have warned that NHS operations face being cancelled due to the CO2 shortage.  

Lord Adebowale, chairman of the NHS Confederation, yesterday urged ministers to ensure the NHS is prioritised for supplies.

He told Times Radio: ‘What I am concerned about – and I think [Business Secretary] Kwasi Kwarteng and others will be focused on this – is making sure there’s enough CO2 for the NHS.

‘CO2 is used in a number of interventions in the NHS – invasive surgery and endoscopy for instance. Stabilising body cavities so that surgeons can see what’s going on inside.

‘So we have to prioritise the NHS in all this because otherwise people will suffer.

‘But what it does really show is how interconnected it all is and we have to look at things systematically. It’s not just one thing, it’s a number of things.’

The NHS Confederation represents the healthcare system in England, Wales and Northern Ireland. 

CRISIS 3: LORRY DRIVER SHORTAGE

–  Gaps on shelves continue

The problems above are being exacerbated by the well-documented shortage of lorry drivers, which has created gaps on supermarket shelves.  

Britain is currently facing its own 100,000 shortfall of HGV drivers, which retail bosses have partly blamed on changes to migration rules post-Brexit and EU employees returning home.

The Road Haulage Association said the total number of people in the UK with HGV licences this summer is 516,000. 

But the latest Department for Transport data shows 278,700 HGV drivers were employed in 2020, equivalent to 54 per cent of the total.

A view of empty fruit and vegetable shelves at a supermarket in London today. Gas shortages will hit a food industry already struggling with a shortage of drivers 

They put the shortage largely down to Brexit and the pandemic, which led to 14,000 European drivers going home and just 600 of those returning.

Since last year, the industry has also seen large numbers of drivers retiring, while lockdown has hit the training of new drivers with 40,000 HGV driver tests cancelled.

The average age of a UK lorry driver is put at 56 to 57 and not enough young people have joined the industry due to its long hours, unattractive conditions and poor pay.

Drivers’ median hourly pay has risen 10 per cent since 2015 to £11.80 – below the 16 per cent average across other sectors, with new tax changes also not in their favour.

Lorry drivers can only drive for nine hours each day, but many are away from home up to 15 hours a day – putting off many young people who do not want such hours.

Last week, Tesco drivers and warehouse workers at four distribution centres rejected the offer of a 2.5% pay increase. 

If members vote for strike action then the supermarket giant could see empty shelves this winter which could potentially affect the Christmas period. 

Unite said its members voted against a 2.5 per cent offer, arguing it was lower than the RPI rate of inflation so represented a real-terms pay cut. 

 

Time for our leaders to stop being so naïve about energy 

 By Alex Brummer for the Daily Mail

The prospect of Christmas without turkeys and families shivering in their badly insulated homes is hardly an alluring one.

But with Russia playing hardball with natural gas supplies to Europe and the power links between France and Britain temporarily disabled by fire, it finally should be dawning on our politicians that as worthy is Britain’s dash to be the G7’s greenest economy may be, our current system of energy supply is woefully ill-equipped to cope with the transformation.

Mr Kwarteng said he and Mr Will had ‘explored possible ways forward to secure vital supplies, including to our food and energy industries’

Business Secretary Kwasi Kwarteng is trying to cobble together a temporary rescue plan for the food supply chain and gas supplies.

CO2 shortage puts NHS ops at risk, health bosses warn

Hospital operations are at risk of being cancelled because of the shortage in carbon dioxide (CO2), health bosses warned yesterday.

Two large fertiliser plants, which make around 60 per cent of the country’s CO2 as a by-product of its manufacturing processes, have paused production due to record wholesale gas prices.

Lord Adebowale, chairman of the NHS Confederation, yesterday urged ministers to ensure the NHS is prioritised for supplies.

He told Times Radio: ‘What I am concerned about – and I think [Business Secretary] Kwasi Kwarteng and others will be focused on this – is making sure there’s enough CO2 for the NHS.

‘CO2 is used in a number of interventions in the NHS – invasive surgery and endoscopy for instance. Stabilising body cavities so that surgeons can see what’s going on inside.

‘So we have to prioritise the NHS in all this because otherwise people will suffer.

‘But what it does really show is how interconnected it all is and we have to look at things systematically. It’s not just one thing, it’s a number of things.’

The NHS Confederation represents the healthcare system in England, Wales and Northern Ireland.

Two large fertiliser plants, which make around 60 per cent of the country’s CO2 as a by-product of its manufacturing processes, have paused production due to record wholesale gas prices.

Lord Adebowale, chairman of the NHS Confederation, yesterday urged ministers to ensure the NHS is prioritised for supplies.

He told Times Radio: ‘What I am concerned about – and I think [Business Secretary] Kwasi Kwarteng and others will be focused on this – is making sure there’s enough CO2 for the NHS.

‘CO2 is used in a number of interventions in the NHS – invasive surgery and endoscopy for instance. Stabilising body cavities so that surgeons can see what’s going on inside.

‘So we have to prioritise the NHS in all this because otherwise people will suffer.

‘But what it does really show is how interconnected it all is and we have to look at things systematically. It’s not just one thing, it’s a number of things.’

The NHS Confederation represents the healthcare system in England, Wales and Northern Ireland.

Even if this happens consumers – both ordinary households and big energy users such as the steel industry – face horrendous price increases which could trigger a catastrophic rise in inflation.

The greatest paradox in the present energy crisis is that it has set off a chain reaction: there is a shortage of cheap gas to fire up fertiliser plants which, in turn, produce the carbon dioxide needed to keep food supplies plentiful.

In other words, the UK’s determination to become carbon neutral has drawn attention to the important role which CO2 – vital for the food and drinks industry – actually plays in our day-to-day lives. What is potentially really humiliating for Boris Johnson’s government is that this debilitating episode comes on the eve of the COP26 climate change conference in Glasgow that starts on October 31.

What the crisis reveals is the shocking geo-political naivety over the years of this country’s leaders when it comes to energy policy. The current policy is still highly dependent on natural gas. And it assumes that natural gas, which globally is in plentiful supply, will always be available as a backup when wind turbines fail to turn and our aged fleet of nuclear plants are shut down for maintenance.

But it is an energy policy that assumes there is a benign regime in Moscow, open shipping lanes in the Middle East and that inter-connectors – or power links –between the UK and France and the UK and Norway are in fine fettle.

Yet if just one of these assumptions proves mistaken, gas supplies are reduced and the price of the natural gas that does arrive soars.

Shelf gaps ‘by end of the week’

Supermarket shelves may have gaps by the end of this week if shortages of carbon dioxide worsen, it has been warned.

The gas is used to stun pigs and chickens before slaughter as well as in fresh food packaging. Some poultry suppliers warned they only have two or three days of gas supply left.

Ian Wright, of industry body the Food and Drink Federation, told the BBC yesterday: ‘I think we will see gaps on shelves fairly soon. We are not going to run out of food but there are going to be concerns about the continuity of supply to supermarkets and convenience stores.’ Ranjit Boparan, owner of turkey processor Bernard Matthews, warned that without CO2 supply, ‘Christmas will be cancelled’. Online grocer Ocado said its ability to deliver frozen food was also being affected.

 

Among the reasons that German Chancellor Angela Merkel has been so fawning towards President Putin is that she recognises he holds the whip-hand on gas supplies.

That is because Gazprom, the Russian energy behemoth, controls the flow of gas from deep in the Urals into Germany as well as much of the rest of Europe, including Britain eventually.

The fact is that the UK is at the end of a very long pipeline, with supplies pretty much dependent on Putin’s whim. And yet we have an eco-minded government that, because of its determination to meet carbon targets, is determined to end our use of coal and reluctant to grant new oil-drilling licences, for instance, to firms wishing to further develop the Cambo oilfield near Shetland.

Other European nations, such as the Netherlands, have dealt with the Moscow threat by building huge storage capacity which can withstand months of disruption. In the UK our biggest storage at Rough off the coast of East Yorkshire was shut down in 2017 because of safety and leakage concerns.

The belief was that secure liquid natural gas supplies, arriving from Qatar, would ensure constant availability.

That judgment has proved flawed. The surge in gas prices in August and September has been truly frightening and is why the fertiliser processor CF Industries – quoted on the Nasdaq stock market in the US – closed down its operations, strangling supplies of carbon dioxide for the food industry.

Carbon dioxide is used in the nation’s abattoirs for stunning livestock before slaughter and has led to squeals of protest from the pig producers and turkey specialist Bernard Matthews. In frozen form carbon dioxide is used to produce the dry ice required to deliver fresh meat and poultry supplies to supermarket shelves safely.

Incidentally, in much smaller quantities dry ice is used to keep the Pfizer Covid jabs fresh on their way to vaccination centres. Even if new supplies of natural gas are secured, there will be the impact on inflation.

And the numbers are startling, with the price of wholesale natural gas climbing by a staggering 800 per cent in August. That alone could add up to £400 to energy bills this autumn leaving those least able to pay without heating in their homes.

The great breakthrough of a competitive energy market, where consumers can change suppliers at a click of a mouse on price comparison sites, is vanishing before our eyes.

Ofgem, the regulator, will likely have to raise the cap, the highest average price for households, to a much steeper level

The newer players are falling like ninepins with four going into liquidation in recent weeks and many more on the danger list.

Ofgem, the regulator, will likely have to raise the cap, the highest average price for households, to a much steeper level.

The point is that energy prices do not stand alone.

They form a large part of the costs of every domestic manufacturing process including steel, cars and food. The UK’s consumer prices index soared to 3.1 per cent in August, in a development which the Bank of England describes as transitory, a posh word for temporary.

That increasingly looks far too optimistic. The inflation genie has been released and getting it back in the bottle could be hugely disruptive.

Will gas supplies run out, how high might bills rise – and why on earth is is affecting food supply? All your energy crisis questions answered

Why are gas prices up?

Wholesale gas prices have soared by 250 per cent since the start of this year because of a squeeze on supplies, according to Oil & Gas UK. From last month, they have gone up 70 per cent and are now at a record high. A long winter meant European countries built lower gas stocks than usual in the summer, while Russia has been providing less gas to Europe. The situation has been made worse by lower wind turbine output and a fire shutting down a cable bringing electricity into the UK from France.

What about my bills?

Around 15million households in England, Wales and Scotland already face a 12 per cent rise in bills from next month when the price cap goes up. 

This is the maximum price suppliers can charge standard tariff customers and is set by Ofgem. 

The cap will increase by £139 to £1,277 on October 1 but it is predicted it could go up by a further £280 when it is reviewed in April. 

Customers who like to find cheaper tariffs currently have fewer options as most of the best deals have been withdrawn.

Five small energy suppliers – Hub Energy, PfP Energy, MoneyPlus Energy, People’s Energy and Utility Point – have ceased trading after being hit by the price rise. Pictured, a selection of Octopus Energy promotional toys

Why are firms failing?

Five small energy suppliers – Hub Energy, PfP Energy, MoneyPlus Energy, People’s Energy and Utility Point – have ceased trading after being hit by the price rise. 

It is feared a further four could go bust this week as they struggle to supply customers at promised prices. 

Households whose supplier collapses will still receive gas and electricity while Ofgem moves them to a new provider. 

If the regulator is unable to find one it will appoint a temporary special administrator.

What about CO2?

Two of the country’s largest fertiliser plants have paused production due to record gas prices. 

The Teesside and Cheshire sites, run by US firm CF Industries, produce 60 per cent of the UK’s CO2 as a by-product.

How is it affecting food?

CO2 is used to stun pigs and chickens before slaughter. Poultry suppliers warned they only have two or three days of CO2 left. 

The gas is used in fresh food packaging, in beer and fizzy drinks, and is needed by hospitals and the nuclear power industry. 

Business Secretary Kwasi Kwarteng yesterday sought to persuade CF Industries chief executive Tony Will to restart production. 

But Mr Will, who flew in from the US for the meeting, said it is not commercially viable whilst gas prices remain high. 

The Government was last night considering how it could incentivise the firm to begin manufacture again ahead of further talks in the coming days.

Energy provider seeking a bailout amid pressure on industry 

An energy provider to 1.7 million customers in the UK is seeking a bailout amid pressure on an industry facing surging gas wholesale prices.

The Financial Times first reported on Sunday that Bulb was working with financial advisory firm Lazard to help secure new sources of funding.

The newspaper claimed options being explored include raising funds from investors or a potential joint venture or merger with another company.

A Bulb spokesperson said: ‘From time to time we explore various opportunities to fund our business plans and further our mission to lower bills and lower CO2.

‘Like everyone in the industry, we’re monitoring wholesale prices and their impact on our business.’

It comes after four small energy companies folded amid the surge in gas prices, with wholesale costs up 250% since January.

Business Secretary Kwasi Kwarteng is due to hold further talks with the energy industry and consumer groups on Monday.

Mr Kwarteng has said he is ‘confident’ that the security of energy supplies can be maintained.

The rise in gas prices has been attributed to a range of factors, including a cold winter which left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.

 

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