The energy price cap will stay, the Government and energy regulator Ofgem have insisted despite mounting pressure from energy firms following the soaring price of wholesale gas.
In a joint statement issued late on Monday, business secretary Kwasi Kwarteng and Ofgem chief executive Jonathan Brearley said they had agreed the price ceiling must continue.
“Central to any next steps is our clear and agreed position that the energy price cap will remain in place,” they said.
Mr Kwarteng had earlier told MPs the cap saves 15 million households up to £100 a year, adding: “It’s not going anywhere.”
The cap protects customers from sudden hikes in wholesale gas prices which are currently forcing some companies to go out of business.
It comes despite mounting pressure from energy firms calling for the cap to be scrapped amid fears more firms could collapse, with four already gone bust.
On Monday i reported how some of the big six energy companies were locked in negotiations with the Government on the issue and had pushed for the price cap to be removed altogether or raised again.
State-backed loans are being considered to keep the industry going with the gas crisis set to increase the cost of living as taxpayers face footing the bill.
The Government is understood to be close to agreeing deals worth tens of millions of pounds with companies such as Bulb to rescue it and other energy firms from collapse.
Mr Kwarteng held a crisis meeting with the industry before announcing to the Commons yesterday that ministers would not be bailing out energy firms and that the energy price cap would be “staying”.
Emergency talks were also held with producers of carbon dioxide (CO2), vital for many food and drink products – that have halted due to the rocketing prices.
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 per cent since January, with a 70 per cent 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.”
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.Internet Explorer Channel Network