Kwarteng hits out at energy companies ‘complaining’ about price cap
Kwasi Kwarteng has launched an attack on energy companies calling for a lifting of the price cap so they can pass on soaring gas costs to consumers, saying that firms went into business with their “eyes open”.
The business and energy secretary told MPs again today that he was committed to keeping the price control, which caps household energy costs at £1,277 a month.
A number of challenger energy companies have gone bust due to the 250 per cent rise in wholesale gas prices since the start of the year.
This includes People’s Energy and Utility Point, who both went bust last week, while Bulb was consulting with Lazard on Sunday night to try and get new funding sources.
Many smaller companies who offer low prices do not hedge against the risk of future price rises, leaving them at risk of collapse when costs soar.
Kwarteng said earlier this week that more companies will fold, but insisted the government would not bail out any of them out.
Speaking to the Business, Energy and Industrial Strategy (Beis) Committee today, Kwarteng hit out at energy firms complaining about the price cap.
“I know companies who went into business knowing there was a price cap, now they’re complaining about the price cap,” he said.
“So it’s a very odd situation if you’re starting a business to go into with your eyes open and then complain about a key feature that was there when you entered the market.”
He added: “I am asking the industry to look to itself to support itself, I think it can do that. I think there’s some very good companies out there, I feel the structures we have now are robust.
“The price cap is here to stay, we’re not moving it and they have to work within that context.”
Analysts predict that of the 55 energy companies left in the UK that only 10 or fewer may still be in business by the end of the year.
Energy regulator Ofgem is tasked with transferring customers of failed companies onto larger energy companies.
The government is considering handing out loans to energy firms that take on customers of failed companies, with Kwarteng warning today that “we have to prepare longer term for high prices”.
Ofgem chief executive Jonathan Brearley told MPs today that the rate of surging prices “really is something that we don’t think we’ve seen before at this pace”.
“We do expect more [suppliers] not to be able to face the circumstances we’re in, but it’s genuinely hard to say more than that, partly because that means predicting what may happen to the gas price,” he said.