Business Secretary and energy regulator agree price cap should ‘remain in place'

Energy companies and the Government agreed the energy price cap must “remain in place” during crunch talks to find a solution to record gas costs.

Business Secretary Kwasi Kwarteng held a crisis meeting with the industry before announcing to the Commons that ministers would not be bailing out energy firms and that the energy price cap would be “staying”.

In a joint statement issued late on Monday evening, Mr Kwarteng and Ofgem chief executive Jonathan Brearley confirmed they had taken a unified position over the price ceiling continuing.

“Central to any next steps is our clear and agreed position that the energy price cap will remain in place,” they said.

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Mr Kwarteng had earlier told MPs the cap saves 15 million households up to £100 a year, adding: “It’s not going anywhere.”

It comes as the Daily Telegraph reported that some companies present at the meeting – attended by the likes of Scottish Power, Octopus, E.ON and EDF – called for the cap to be scrapped amid fears more firms could collapse, with four having already gone bust.

Some analysts have reportedly predicted the UK’s energy companies could be drastically reduced over the coming months, leaving as few as 10 if the gas crisis continues.

The energy price cap, following a review in August, is already set to rise.

From October 1, those on default tariffs paying by direct debit face an increase of £139, rising from £1,138 to £1,277.

Prepayment customers will see a higher increase of £153, taking their annual bill from £1,156 to £1,309, according to Ofgem data.

Behind the call for industry support are surging wholesale gas prices which have increased by 250% since January, with a 70% rise since August alone, leading to the demise of some smaller energy firms.

The soaring prices show no sign of abating, with Bloomberg reporting the UK natural gas wholesale price had settled at its highest ever closing price on Monday.

Addressing MPs, Cabinet minister Mr Kwarteng said there needed to be an acceptance that gas prices “could be high for longer than people anticipate”.

But he called fears of a three-day working week “alarmist”, adding: “There is absolutely no question of the lights going out or people being unable to heat their homes.”

Business Secretary Kwasi Kwarteng (Victoria Jones/PA)

Energy suppliers are understood to be privately talking to the Government about backing loans or a “bad bank”’ style solution to a potential collapse in dozens of energy companies.

The rise in gas prices has been blamed on a number of factors, including a cold winter which left stocks depleted, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.

The hike has caused fresh problems for supermarkets already dealing with a lorry driver shortage as warnings emerged about the potential for shortages on the shelves as the knock-on effect of the gas price rise ripples through the economy.

Producers have warned that supplies of meat, poultry and fizzy drinks could all be hit due to a shortage of carbon dioxide.

It follows the shutting down of two large fertiliser plants in Teesside and Cheshire – which produce CO2 as a by-product – with the owners citing the increase in gas prices.

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