Ministers calm fears of threat to energy price cap amid fears of winter ‘crisis’ for industry

Alok Sharma had appeared to say move is ‘under discussion’, but cap will ‘remain in place’

Rob Merrick
Deputy Political Editor
Sunday 19 September 2021 16:43
Alok Sharma insists gas supplies are secure

Ministers have moved to calm fears of a threat to the energy price cap to save struggling gas firms, amid fears of a gathering “crisis” from soaring industry prices.

The Cabinet minister Alok Sharma appeared to say the move was “under discussion” in response to the supply crisis that is also making frozen food shortages increasingly likely.

But a government spokesman told The Independent: “Our energy price cap will remain in place this winter and exists to protect millions of customers from sudden increases in global gas prices.”

The guarantee is only until next spring because the level of the cap will be reviewed then, but it is understood there is no intention of removing the cap altogether at any stage.

Ministers say it protects around 15 million British households on default tariffs, saving them between £75 and £100 a year on dual fuel bills.

Trials are also underway of automatic switching for customers on expensive default energy tariffs to cheaper deals, unless they opt out.

Mr Sharma raised eyebrows when he nodded in reply to being asked, on the BBC’s Andrew Marr Show, if lifting the cap is “under discussion” if “gas prices carry on rising”.

Surging natural gas prices have pushed 7 energy suppliers out of business this year – and it is feared that another that 4 more may go bust very soon.

Mr Sharma replied: “Let’s see where we are. I know that the business secretary is going to have these very detailed discussions.”

Prices leapt by more than 70 per cent in August alone and households could already see bills jump by as much as £400 in a year, according to some estimates.

The Cop26 president also sought to calm fears of an energy crisis, by saying: “We are not seeing risk to supply at this time and prices are being protected.”

The government is thought to be sceptical that lifting the cap would help at-risk firms very much and that any benefit would certainly be outweighed by the pain dealt to households.

Ofgem has already increased the price cap from an average of £1,138 per year to £1,277 from next month, for someone on a standard variable tariff.

The next official review is in April, when it may rise above £1,500, according to The Energy Shop price comparison website.

Andrew Large, the outgoing chairman of the Energy Intensive Users Group, said the impact of the global supply squeeze was “potentially catastrophic”.

“We’re already seeing plant closures at a time of year when the weather is still warm and domestic heating is low. Fast forward two months and this could be an acute crisis,” he told The Daily Telegraph.

Fertiliser plants in Teesside and Cheshire have shut and Ranjit Singh Boparan, the owner of Bernard Matthews and 2 Sisters Food Group, said the supply of turkeys at Christmas cannot be guaranteed.

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