The UK government will not bail out failing power and gas companies amid the unprecedented high prices in the country, Business and Energy Secretary of State Kwasi Kwarteng said Sept. 20.
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Kwarteng said despite several companies going out of business under pressure from soaring gas and power prices, there was no issue of security of supply, and no risk for consumers.
UK prices have soared in recent weeks, adding to a sustained price rally since the start of 2021, with the day-ahead price on the UK NBP hub assessed by S&P Global Platts on Sept. 17 at 165 pence/therm (Eur66/MWh, $22.69/MMBtu). That compared with a day-ahead assessment of 29.1 p/th a year earlier, representing a 467% increase year on year.
The government "will not be bailing out failing companies," Kwarteng told the UK Parliament House of Commons, adding it is "not a question of security of supply."
Kwarteng added that the government did not expect supply constraints this winter, but warned that further company closures were expected.
"We may well expect to see further companies exiting the market in the coming weeks," he said, adding that it was not unusual to see smaller companies leaving a competitive market.
Kwarteng said there was no cause for alarm, adding that the energy market should not pay the price for the poor practices of a few companies.
The opposition Labour party's Shadow Secretary of State for Business, Energy and Industrial Strategy Ed Miliband said the government had been "much too complacent" on security of energy supply, citing the decision to close the offshore Rough gas storage facility in 2017.
Kwarteng acknowledged that "gas storage is definitely an issue," and said "clearly this is a situation that needs to be reviewed." But he said that the issue of the Rough storage facility was "not relevant" to the question of security of supply.
Kwarteng said the UK benefitted from a diverse range of natural gas supplies from domestic production, pipeline supplies from Norway, two interconnectors with Continental Europe, as well as LNG imports, and that the country had more than sufficient capacity to meet demand. He said the government remained committed to expanding renewable and nuclear power capacity.
He added that electricity grid operator National Grid had the tools required to handle the situation, and was confident that electricity security of supply was stable under a wide range of scenarios.