It comes after the Prime Minister insisted the gas shortage is only a ‘short term’ problem causing disruption on food supplies and support such as the Warm Homes Discount
The chief executive of energy regulator Ofgem has warned millions of UK residents will be impacted as multiple energy suppliers face bankruptcy in coming weeks.
Jonathan Brearley, who has run Ofgem since 2018, said energy prices are increasing in an “unprecedented” way.
“Gas prices are almost six times the level they were last year and rose 70% in August. We are in unprecedented cost territory,” he said, giving evidence on the gas price surge to the Business, Energy and Industrial Strategy (BEIS) Committee.
“Increasing international demand, potential restrictions around supply, means we cannot predict how long it will last,” he added.
“We expect a large number of customers to be affected.
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“If you look at gas prices, it is something we have not seen before at this pace,” he admitted.
Under normal circumstances, Brearley said “It’s not unusual for suppliers to go out of the market” but he added “there are dramatic costs in supplier costs this time.
“We’ve had five collapse in the past few months, we do expect more to face the circumstances.”
“We do expect a large number of customers to be affected.”
He added that the UK has a diverse resource of gas but “we cannot rule anything out” when speaking about a long-term shortage.
The hearing comes after the Prime Minister insisted the gas shortage is only a ‘short term’ problem despite knock on effects on food supplies and the Warm Homes Discount.
Boris Johnson said the unprecedented surge in natural gas prices is a “temporary” problem caused by the global economy bouncing back after the pandemic, arguing a “phenomenal demand for gas” in Asia had affected U.K. supplies.
“I want to give a general reassurance that the problems we’re seeing are temporary,” Johnson told reporters.
“They are caused by the resurgence of the global economy as Covid starts to retreat in parts of the world.”
He said he is “very confident” in the U.K.’s supply chains and will work with gas companies to ensure the consumer’s needs are met.
Business Secretary Kwasi Kwarteng spent the weekend in talks with senior executives from energy companies after at least five U.K. energy suppliers were forced to shut.
He said the energy regulator Ofgem has measures in place to ensure gas and electricity delivery will continue as Britain enters its colder winter months.
The government is understood to have shut down plans for recue packages or a lift on the energy price cap but is considering state-backed loans to support firms that take on customers of failed suppliers.
Natural gas is crucial to power generation for homes and industry and for heating in winter, with more than 22 million homes connected to the grid in 2020.
If a supplier collapses, Ofgem will assign all new customers a replacement supplier.
In the interim, customers are advised to take a meter reading and wait for correspondence from their new supplier.