Businesses demand end of price caps as crisis deepens

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Household bills could climb even higher than expected as energy giants call for price caps to be lifted amid crisis that has left small businesses supplying up to one million homes at risk of shutting down their doors.

I understands that some of the six major energy companies currently in negotiations with the government are pushing for the energy price cap to be lifted, as they are called upon to step in to supply customers without suppliers.

Cabinet Minister Alok Sharma said the price cap would remain in place “this winter”, but warned the government could not rule out removing it in the future.

Millions of households have already been warned their bills could rise by £ 139 per year as the price cap is raised amid soaring wholesale gas prices.

The energy price cap is a tool for controlling the cost of gas and electricity in the UK. It is based on a typical consumer using an “average” amount of gas and electricity each year.

Energy regulator Ofgem announced last month that from 1 October the price cap would drop from £ 1,138 to £ 1,277 for 11 million consumers at default tariffs, while four million customers at prepayment would see the cap increase by £ 153, from £ 1,156 to £ 1,309. .

Suppliers across Europe are still struggling to keep up with the costs of soaring wholesale prices and several smaller UK suppliers are on the verge of collapse.

Four small suppliers have already gone bankrupt this month – MoneyPlus Energy, PFP Energy, People’s Energy and Utility Point – and that number is expected to double in the next fortnight, leaving up to a million customers without a supplier.

Big companies have warned that the high cost of providing electricity to hundreds of thousands of new customers will leave them stranded and are asking for government help.

A source close to the talks said a number of energy giants are planning to campaign for the price cap to be raised again, but others are wary of a public backlash.

The source said: “All the margins are very tight. The sector would be worried about the perspective of it (a price ceiling increase). “

On Friday, EDF announced that it had been mandated by Ofgem to take care of 220,000 customers who remained without a supplier after the closure of Utility Point.

After meeting with Ofgem Managing Director Jonathan Brearley on Sunday, Business Secretary Kwasi Kwarteng said he was “assured… well-established plans in place to protect the market and consumers”.

Mr. Kwarteng added, “I understand that these will be worrying times for businesses and consumers. We are working hard to manage the impact of global gas price increases… Energy price caps are in place to protect millions of customers from sudden increases in global gas prices this winter.

Emma Pinchbeck, Managing Director of Energy UK, which represents the industry, said: “At the moment we are closely monitoring the situation, and there are many ideas for solutions to the problems that are [could] arise.

“The industry is well aware of the impact that the price increase will have on our customers and is committed to providing additional support this winter. Anyone worried about invoices should contact their supplier.

Millions of people are expected to see their energy bills increase by more than £ 100 a year – but households have been told ‘there are still cheaper offers’.

Lisa Barber, editor of home products and services at Which ?, said: “The recent surge in wholesale gas prices could see more suppliers raising their energy bills to the maximum allowed by the price cap – an increase of around £ 139 for customers on the standard variable. tariffs – and has already led to the decrease in the number of cheap energy offers on the market.

Henry Edwardes-Evans, energy analyst at S&P Global Platts, said he would be “surprised if all other household tariffs do not increase by a similar amount”, although this “could be postponed until next year. “. He added, “Utilities don’t like to irritate customers with hikes for a heavy winter. It is a competitive market with fine margins, hence likely failures among small suppliers. “


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