Government holds urgent talks with energy firms over gas price rises

The government has said energy security is “an absolute priority” as the business secretary, Kwasi Kwarteng, prepared to hold talks with energy industry representatives over concerns about a rise in wholesale gas prices.

Kwarteng will speak to chief executives from energy suppliers and operators on Saturday to discuss the extent of the impact of surging prices, which have been blamed on high global demand, maintenance issues and lower solar and wind energy output.

He tweeted: “Today, I’ll be speaking to chief executives of the UK’s largest energy suppliers and operators to discuss the global gas situation.

“Britain has a diverse range of gas supply sources, with sufficient capacity to more than meet demand. We do not expect supply emergencies this winter.”

Dermot Nolan, a former head of Ofgem, the industry regulator, warned Britain was likely to face high energy prices for the rest of the year, adding he could not see a tangible solution the government might be able to pursue in order to bring down prices.

Nolan said the increases were the result of depleted stocks following a cold season last winter, reduced supply from Russia, and increased demand in east and south-east Asia for liquefied natural gas.

He told the BBC Radio 4 Today programme: “It is not obvious to me what can be done in the very short run. Britain does have secure, relatively diverse sources of gas, so I think the lights will stay on.

“But I am afraid it is likely in my view that high gas and high electricity prices will be sustained for the next three to four months. It is very difficult to see what the government can do directly in this regard.”

It is understood that Kwarteng has meetings on Saturday with senior executives from Ofgem, Centrica, National Grid, Energy UK, Octopus, Ovo, SSE, EDF, Scottish Power, Shell Energy, E.ON, Bulb and SGN.

Government sources have reportedly told the BBC there is no threat to the UK’s gas supplies, but that potential impacts on small energy companies most at risk of exposure are being monitored.

Two large fertiliser plants that produce CO2 as a byproduct in Teesside and Cheshire have shut as a result of the sudden rise in wholesale gas prices.

The chief executive of the British Meat Processors Association, Nick Allen, said CO2 was essential to both the humane slaughter of livestock and extending the shelf life of products.

He told the Today programme: “If we haven’t got the CO2 supplies, on the packaging side that reduces the shelf life of products going on the shelves at a time when we are really struggling because of all the transport problems.

“This has come as a huge shock; it has happened so quickly. I think everyone is outraged in the industry that these fertiliser plants can shut down without any warning whatsoever and suddenly take something which is so essential to the food supply chain off-stream just like that.

“We really need the government to step in now and actually do something.”

A government spokesperson told the BBC: “The UK benefits from having access to highly diverse sources of gas supply to ensure households, businesses and heavy industry get the energy they need at a fair price.

“We are monitoring this situation closely and are in regular contact with the food and farming organisations and industry, to help them manage the current situation.”

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