Chancellor of the Exchequer Rishi Sunak appears to have ruled out government help for companies struggling with soaring gas prices, as news came that two more UK energy suppliers have ceased trading.
Furthermore, it has been reported that Glencore-backed CNG Group, which supplies natural gas to 15-20 retail energy companies, has written to its customers saying that it will no longer supply the wholesale market, sparking fears of further collapses among small UK energy firms.
The BBC reported that CNG made the decision after having recently been forced to supply gas to households whose suppliers had collapsed, including Utility Point and Avro Energy.
CNG chief executive Paul Stanley told the Financial Times that the company was working “constructively and collaboratively with industry counterparts to try to find the best possible outcome in these challenging conditions”.
Speaking to Sky News after a meeting with G7 finance ministers in Washington, Sunak said “it’s not the government’s job” to manage the costs of individual products.
Asked if he would accept some companies going out of business, Rishi Sunak said he “believes in a market economy”.
A further two residential energy suppliers, BP PLC (LSE:BP.)-backed Pure Planet and Colorado Energy, announced that they are going out of business as a result of the record high wholesale energy prices, two of the four companies seen as being at risk earlier in the week.
Customers of the collapsed companies will be moved to new suppliers by energy regulator Ofgem.
Ofgem sets a price cap on domestic energy prices twice a year, which limits the cost for customers. However, the cap prevents suppliers from passing on rising costs to customers.
The cap that came into effect on 1 October will increase households’ average bills by GBP139 a year.
“The government and Ofgem, our regulator, expects Pure Planet to sell energy at a price much less than it currently costs to buy. This is unsustainable, and therefore, sadly we have had to make the difficult decision to cease trading,” Pure Planet said in a statement.
Wholesale gas prices have soared by more than 600% over the past twelve months due to a combination of low stocks, outages in supplies to Europe and poor wind speeds affecting renewable generation.
Pure Planet supplies gas and electricity to around 235,000 domestic customers, while Colorado Energy supplies around 15,000 domestic customers.
In September, nine companies supplying over 1.7mln UK customers went bust due to the soaring energy prices.