Saturday, December 4

UK Energy Industry, Minister Plan Third Day of Emergency Talks

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(Bloomberg) — UK energy companies will go into a third day of emergency talks with the government as a surge in gas and electricity prices threatens to put suppliers out of business.

Business Secretary Kwasi Kwarteng has convened a round table discussion with the energy industry on Monday to “plan a way forward.” The meeting comes after crisis talks with the likes of Centrica Plc, Britain’s biggest supplier, and EDF Energy on Saturday, as well as two days of gatherings with UK energy regulator Ofgem.

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Rising energy bills are giving rise to concerns about inflation, as well as hardship for millions of lower-income Britons over the winter. Seven energy suppliers in the UK have failed this year and there are concerns more will do so as prices rise, leaving in a bind companies that previously sold energy at lower levels.

Gas prices in the UK have almost tripled this year due to a supply crunch, forcing some industrial users to curb production and sending ripples through the food-supply chain.

“Ofgem continues to work closely with government and industry to ensure consumers continue to be protected while global gas prices are high and will speak further on these issues at the industry round table tomorrow,” the regulator said in a statement on Sunday.

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The energy industry is demanding a multi-billion-pound emergency package from the government, including a mechanism to absorb potentially unprofitable customers from smaller competitors that have failed, the Financial Times reported on Sunday. A decision hasn’t yet been made, the paper said.

“Some energy companies are facing pressure,” Kwarteng said on his Twitter account on Saturday. “Ofgem has robust measures in place to ensure that customers do not need to worry, their needs are met, and their gas and electricity supply will continue uninterrupted if a supplier fails.”

When suppliers fail, the cost is typically pooled among energy companies and then passed on to consumers. The customers are transferred to another supplier which must honor the supply contracts already agreed, likely at a loss.

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