October 1, 2022 4:36 am
UK government holds emergency talks to bolster energy firms

UK government holds emergency talks to bolster energy firms

LONDON, (AP) — Britain’s business secretary stated Monday that there is no danger people will not be able heat their homes this winter due to an increase in natural gas prices. He held emergency talks with energy suppliers as well as consumer groups.

Kwasi Kwarteng assured lawmakers that government would not bail out struggling energy suppliers due to the crisis. Kwarteng stated that the government was ready to appoint an administrator to oversee failed suppliers so that gas and electricity can continue flowing until customers are able to move to new suppliers.

“There’s no way to predict that the lights will go out or that people won’t be able to heat their homes. Kwarteng stated this to the House of Commons. “There will be no three-day working weeks or a throwback to the 1970s. Such thinking is alarmist, unhelpful and completely misguided.”

Kwarteng said he would make a joint announcement with Britain’s energy regulator later in the day on the government’s plans to address the crisis.

Four small energy companies have been shut down in the last week due to the sudden rise in global gas prices. The global economic recovery following the COVID -19 pandemic has led to a sharp rise in wholesale gas prices in Britain. However, supplies have been strained by storms in the United States and planned maintenance.

Kwarteng said that Britain’s diversified gas supply means that it can meet its energy needs better than other European countries, which is not the case with some European countries. The U.K. receives half of its gas supply from domestic production, 30% coming from Norway, the remainder from European pipelines, and liquefied natural gases delivered by ship. Despite this, taxpayers could end up spending billions of pounds to support the energy sector through these current difficulties.

Some large energy companies have suggested that customers of failing suppliers be moved into temporary government-owned companies that can be sold later. This was reported by British media. This proposal is similar to those of the “bad banks” that housed high-risk assets during the global financial crisis.

An alternative option is to offer loan guarantees to large energy suppliers in order to absorb customers from failed businesses. Higher energy bills would eventually recover the costs of such a program.

Prime minister Boris Johnson compared the economic problems to a “big thaw” following a frost that had frozen the pipes.

“When you have problems, the leaks, and all the difficulties that are happening to the global economic system, that’s what it is,” he said to reporters at the U.N. General Assembly in New York. It’s heating up quickly and you can see problems in the supply chain, which is causing this phenomenon. We’re going to fix .”

U.K. Prices are already high as price comparison websites report heavy volumes of customers searching for long-term deals to lock in their prices. After approving a 12% price hike for customers who do not have such contracts in August, gas and electricity prices are expected to rise for many next month.

Peter Smith is the director of policy advocacy and policy at National Energy Action. He said that the sudden rise in energy prices could not have come at a more difficult time for consumers already suffering from the economic effects of the pandemic.

The overall inflation rate rose to 4.1% last week, according to the Office for National Statistics. This was the fastest increase in consumer prices since records began.

Before this pandemic, around 13% households in England and 25% families in Scotland were considered to be experiencing fuel poverty. This refers to people who spend a large portion of their household income to maintain a comfortable temperature in their homes.

“Millions are already at breaking points and suffering the dire consequences of not being capable of heating their homes, Smith stated. “The U.K. government and energy regulator need to urgently address the toxic impact this is going to have on physical and mental health across the U.K. this winter.”