Britain’s business secretary says there is no danger that people won’t be able to heat their homes this winte

Official says government won’t bail out failing energy suppliers amid growing crisis

LONDON—Britain’s business secretary said on Monday there is no danger that people won’t be able to heat their homes this winter after a surge in natural gas prices forced him to hold emergency talks with energy suppliers and consumer groups.

Kwasi Kwarteng also assured lawmakers the government wouldn’t bail out failing energy suppliers as a result of the growing crisis. He earlier said that the government is prepared to appoint a special administrator for failed suppliers to ensure gas and electricity keeps flowing until their customers can be moved to new suppliers.

“There is absolutely no question of the lights going out or people being unable to heat their homes,” Kwarteng told the House of Commons. “There will be no three-day working weeks or a throwback to the 1970s. Such thinking is alarmist, unhelpful and completely misguided.”

Four small energy companies have failed in recent weeks because of the sudden increase in gas prices worldwide. Wholesale gas prices in Britain have tripled this year as the global economic recovery from the COVID-19 pandemic increases demand at the same time storms in the U.S. and planned maintenance have crimped supplies.

Kwarteng stressed that Britain’s diverse gas supply means it has more than enough to meet the nation’s energy needs, unlike some European countries that rely on a single source. The U.K. gets half its gas supplies from domestic production, 30 per cent from Norway, and the rest from European pipelines and liquefied natural gas delivered by ship.

Still, supporting the energy industry through the current troubles may ultimately cost taxpayers billions of pounds.

One option proposed by some large energy firms is to move the customers of failed suppliers into a temporary government-owned company that could be sold at a later date, British media reported. This proposal would be similar to the so-called bad banks that were used to house the high-risk assets of some lenders during the global financial crisis.

Another option is for the government to provide loan guarantees to large energy suppliers to absorb the customers of failed companies.

The costs of such a program would ultimately be recovered through higher energy bills.

“This is really a function of the world economy waking up after COVID,” Prime Minister Boris Johnson said as he arrived in New York on Sunday. “We’ve got to try and fix it as fast as we can, make sure we have the supplies we want, make sure we don’t allow the companies we rely on to go under. We’ll have to do everything we can.”

U.K. consumers are already feeling the pinch, with price comparison websites reporting heavy volume as people search for increasingly rare opportunities to lock in prices with long-term contracts. Gas and electricity costs for many people are set to jump next month after regulators in August approved a 12 per cent price increase for customers without such contracts.

Peter Smith, director of policy and advocacy at fuel poverty charity National Energy Action, said the spike in energy prices couldn’t come at a worse time for consumers who are already struggling with the economic impact of the pandemic.