Cabinet Minister Kwasi Kwarteng said he feared recent spikes in wholesale costs which have driven cost surges for power firms could persist
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Gas customers should brace themselves for years of soaring bills, the Energy Secretary warned today.
Top Tory Kwasi Kwarteng said he feared recent spikes in wholesale costs which have driven cost surges for power firms could persist.
And the spiralling prices are set to filter down to higher household bills.
Mr Kwarteng told the Commons Business, Energy and Industrial Strategy Select Committee: “I think ‘temporary’ means that it’s a position where the price has spiked considerably… I think it has quadrupled in the last six months, seven months.
“You would expect normally that the price would revert to the mean, it’s not something that we think is going to be sustainable.
“But, of course, we have to prepare for longer-term high prices.”
He did not, however, rule out introducing a windfall tax on firms which have benefited from the soaring gas prices.
Darren Jones, chairman of the Business, Energy and Industrial Strategy Select Committee, said Spain had imposed a levy on “the generators and traders who are making very significant profits” to fund protections for consumers.
Asked if that was a possibility here, Mr Kwarteng said: “We are looking at all options.
“What they are doing in Spain is recognising that it’s an entire system – the energy system is an entire system.
“I am in discussion with Ofgem and other officials, looking at all options.”
The warning comes as the Tories prepare to slash £20 a week from the household budgets of the poorer families when the temporary Universal Credit hike is scrapped next month.
He later told the Committee “consumers have to be protected from exorbitant [energy] prices, especially vulnerable customers.”
Mr Kwarteng admitted on Tuesday that the families face a “difficult winter” as the UC cut coincides with rising energy bills.
Giving evidence to the Committee, he acknowledged the “high correlation between people on pre-payment meters and people on UC” before adding, “that’s why I want to protect them in this energy squeeze”.
Tens of millions of pounds of taxpayers’ cash could be spent funding the operating costs of a major US-owned fertiliser firm, which produces huge amounts of carbon dioxide as a by-product.
CF Industries halted operations at its plants in Cheshire and Teesside due to soaring global gas prices.
Mr Kwarteng brokered a deal with the firm for a three-week bailout to prevent shortages of food, as suppliers of meat and frozen food use CO2 in the packaging process.
Earlier, MPs heard that the Government and Ofgem that the sector was fragile at least two years ago.
Energy UK chief executive Emma Pinchbeck said a short-term crisis as gas prices spike has exposed some fault lines in the UK market and warned that even well-run suppliers might go bust.
“I took this job a year ago. When I was hired, the chairman of Energy UK said that your biggest challenge is going to be the vulnerability of the retail market,” she told MPs on the Business, Energy and Industrial Strategy Committee.
“And I know that for a year or more before that my team had been making the case to the regulator and the Government that the sector is fragile.
“There’s a short-term crisis here, which is in some ways out of our control – it’s to do with the gas prices – but it’s been exacerbated and arguably caused by our regulatory design.
“And that is a resilience and security of supply risk in the future. It’s terrible news for customers in the long run.”
The Business Secretary believes the best way to avoid future crises is to ensure the UK has a “diversity of supply”.
“A diversity of supply will keep us safe from shocks to the system including any changes to Putin’s regime.”
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