1014 GMT October 28, 2021
U.K. Business Minister Kwasi Kwarteng told Sky News on Tuesday that “a lot of options” were currently being considered, including potential state-backed loans. However, he suggested not every energy supplier would be eligible to benefit from such a scheme.
“Every year between five and eight companies exit the market and I don’t want to prop up failing companies, I don’t want there to be a reward for failure,” he said. “I don’t think we should be throwing taxpayers’ money at companies which, let’s face it, have been badly run.”
Fears that some of Britain’s energy suppliers may struggle to stay afloat have been rising in recent weeks, as wholesale gas prices continue to rise to unprecedented levels across Europe.
The October gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was volatile on Tuesday, trading just above 74 euros ($86.9) per megawatt-hour by the early afternoon in London. Last week, the contract hit a record high of 79 euros per megawatt-hour.
Since January, its value has risen by more than 250%.
Kwarteng said Tuesday that the U.K. would need to ensure its “Supplier of Last Resort” mechanism — which helps customers transition to a new energy supplier if their current supplier collapses — was made more robust ahead of the winter to ensure a continuous supply of energy.
“It costs a company to absorb up to hundreds of thousands of customers from a company that’s failed, and that may well be a provision for some sort of loan — that’s been discussed,” he told Sky News.
“When I became energy minister more than two years ago, there were 65 suppliers. Today the figure is around 55. Am I going to bailout all 55 of those companies? No, I don’t think we can do that because a handful of them would have exited [the market] anyway.”