LONDON - The unprecedented jump in natural gas prices will force more British energy suppliers out of business and the industry needs to prepare for prolonged pain, energy officials and the business minister said on Wednesday.
A 500% jump in the price of UK gas over the last year has already caused several providers to go bust and the head of regulator Ofgem told parliament he expected the number to rise.
That could push hundreds of thousands of customers onto more expensive packages, just as the COVID-19 furlough scheme and a welfare support comes to an end.
British business minister Kwasi Kwarteng added that while such a sharp spike in the gas price would be expected to ease, he said: "We have to prepare for longer-term high prices."
Analysts have said they expect prices to remain high until next year.
Kwarteng said however that Britain had robust systems to cope with company failures, and that small firms who had recently entered the market could not expect new state handouts to support them through the price squeeze.
Natural gas prices have spiked as economies reopened from COVID-19 lockdowns and as high demand for liquefied natural gas in Asia pushed down supplies to Europe, sending shockwaves through industries reliant on natural gas.
Already meat producers https://www.reuters.com/world/uk/turkeys-wont-be-christmas-menu-if-co2-shortage-persists-2021-09-21 have suffered as high energy prices forced a fertiliser producer to halt production, denying the food industry the carbon dioxide by-product that is used to stun animals for slaughter and pack food.
The government said late on Tuesday it would subsidise the company's energy costs for three weeks to restart production.
Asked if the government would support energy suppliers, Kwarteng replied: "I think they should look to their own resources, and look at their own business models.
"It cannot be right for companies that have entered the market recently, and now essentially in difficult times, stretching out a hand for taxpayers' money."
Jonathan Brearley, the head of energy regulator Ofgem, told parliament the rise in prices was unprecedented.
"It really is something that we don't think we've seen before at this pace," he said. "We do expect more (suppliers) not to be able to face the circumstances we're in."