Consumers urged not to worry about lack of power this winter
With gas prices at record highs, energy supply firms are losing ‘a lot of money’ due to the Government’s price cap.
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Your support makes all the difference.Consumers have been urged not to worry about power shortages this winter, amid fears over an energy crisis.
With gas prices at record highs, energy supply firms are losing “a lot of money” due to the Government’s price cap, which is in place to stop instant bill increases for customers.
Industry leaders have offered their assurances over concerns that people will be without power to heat their homes over winter.
It comes as a steel trade association warned of possible “long-term damage” to the sector.
Ovo chief executive Stephen Fitzpatrick told the BBC’s Andrew Marr Show on Sunday morning: “The one thing I want to reassure everybody on, in terms of consumers, there’s really nothing consumers need to worry about in terms of lights going out this winter or there not being enough power.
“Because of the price cap they are protected from the worst of all of this.”
Dermot Nolan former chief executive of Ofgem, told LBC it is “likely” that many energy firms will start going out of business.
However, he added: “But I don’t think that’s a problem. It’s not great, but I would assure anybody who’s worried about whether their firm will go out of business or not.
“I would assure them you stay where you are, you will be looked after, you will be protected, you will actually be switched to another supplier and your credit balance will be preserved.
“So, though it’s never great to hear about the firm you’re with going out of business, you will be switched to someone else, you will be taken care of, so I would urge people not to worry about that.”
Mr Fitzpatrick also warned that many energy firms will have a “hard time”.
He said: “There are a lot of companies in the market that have sprung up quite recently, there’s been some great competition in the UK market, consumers have benefited.
“But, I think, over the past couple of years it’s become too easy to get into the energy market. It’s a very complicated industry and I think some people have under-estimated the risks and how complicated it is.”
Mr Fitzpatrick said gas prices have soared by 1,000% in 12 months.
Speaking about the price cap for consumers, he added: “At the moment, if we buy gas and electricity on the wholesale market, energy companies are losing a lot of money for every unit they sell.
“So, if a company was to go out of business and then another energy supplier takes over those customers and then has to buy that energy, they will be selling it at an enormous loss.”
The chief executive of trade association Energy UK has said that “exposed” businesses such as energy-intensive users and retailers will be the worst hit.
Emma Pinchbeck told Sky News’ Trevor Phillips on Sunday: “We are expecting more retailers to go out of business this winter. We had around 50 suppliers when we started, and we’re expecting to see more leave the market.
“We have had a process of consolidation, we have had retailers leaving the market in previous years.
“The issue is how many are failing at once and whether or not our mechanisms, which are in place to look after customers when that happens, are up for that many failures in one go.
“And of course what that means for retail on the other side of this, in the spring or when prices return to normal.”
We urge the Government to take action, as has been done in Italy and Portugal, to support the sector
Meanwhile, UK Steel director general Gareth Stace said: “Currently, UK steelmakers face energy prices five times higher than the average of last year, in addition to remarkable price volatility.
“As such, longer and more frequent pauses in production are becoming a fact of life for some UK steelmakers.
“These circumstances are simply not sustainable for the sector. We urge the Government to take action, as has been done in Italy and Portugal, to support the sector.
“Failure to do so may result in long-term damage to the future of the steel industry in the UK.
“Heading into the winter months, increasing prices could result in extended shutdowns, damage to equipment, loss of export opportunities and market share at home, and a loss of talent and employment.”