Business Secretary Kwasi Kwarteng says the measure "protects millions of consumers" and that he reiterated to those involved in the discussions "the need for us all to prioritise consumers".
Image: Four firms have already gone bust and there are fears that others could follow suit
The energy price cap will remain in place, the business secretary has said, after he chaired crisis talks with industry figures over fears many could go under due to soaring wholesale prices for gas.
Kwasi Kwarteng said the measure “protects millions of consumers” and that he reiterated to those involved in the discussions “the need for us all to prioritise consumers”.
“My task is to ensure that any energy supplier failures cause the least amount of disruption for consumers. Consumers come first,” he wrote on Twitter.
“We are looking at options to protect consumers, and meetings continue across government today and this week.
“In any scenario, we will ensure UK consumers have continuity of supply – through a Supplier of Last Resort or a special administrator if needed.”
Wholesale prices for gas have increased 250% since the start of the year and there has been a 70% rise since August.
Consumers are protected from sudden price hikes by the energy price cap, but this puts pressure on suppliers as they cannot pass on the increase in wholesale gas prices to customers.
The rise has been put down to a number of factors, including a cold winter leaving stocks depleted, high demand for liquefied natural gas from Asia and a drop in supplies from Russia.
Four firms have already gone bust and there are fears that others could follow suit.
What happens if your energy supplier goes bust?
If a supplier fails, Ofgem will ensure customers’ gas and electricity supply continues uninterrupted.
Customers will be switched to a “supplier of last resort” and any credit with the old supplier will be transferred.
If a supplier of last resort is not possible, a special administrator would be appointed by Ofgem and the government.
Your old tariff will end and the new supplier will put you on a special “deemed” contract, which will last for as long as you want it to.
The deemed contract could cost you more, as the new supplier takes on more risk (for example, possibly having to buy extra wholesale energy at short notice to supply to the new customers), but Ofgem says it will try to get the best deal for you.
You should take meter readings as you will need to pass these on to your new supplier.
Once your new supplier has been in touch, ask them to put you on their cheapest deal. Then shop around and switch if you want to. You won’t be charged exit fees.
Energy company Bulb has confirmed it is seeking a bailout to stay afloat.
Some analysts have reportedly predicted that the number of energy companies could drop by three quarters in the months to come, leaving as few as 10 still operating.
On Monday, regulator Ofgem said British Gas will take over the 350,000 domestic customers of People’s Energy after it went bust earlier this month.
Speaking on Sunday after a meeting with Ofgem, Mr Kwarteng said “well-rehearsed plans” were in place to ensure consumers were not cut off in the event of further failures.
What's behind the energy crunch – and why it's hurting UK industry
However, he is expected to come under pressure from the big suppliers for a major government support package to help them through the crisis.
Asked about the issue as he arrived in New York for the United Nations General Assembly, Prime Minister Boris Johnson said: “I think people should be reassured in the sense that yes there are a lot of short-term problems not just in our country, the UK, but around the world caused by gas supplies and shortages of all kinds.
“This is really a function of the world economy waking up after COVID.
“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.
“But this will get better as the market starts to sort itself out, as the world economy gets back on its feet.”
Labour’s shadow business secretary Ed Miliband said a lack of long-term planning from the government means “we are so exposed and vulnerable as a country and it is families and businesses that are paying the price”.
He continued: “The government must take all necessary steps to ensure stability for customers and do everything in its powers to mitigate the effects of this crisis on businesses and consumers.
“Yet it is making the squeeze on household finances worse by putting up taxes for working people and cutting Universal Credit.”Internet Explorer Channel Network