THE rapid price rise of gas may not be temporary, Ofgem’s chief executive has warned MPs despite claims from senior UK Government ministers.
Prices for wholesale gas have risen about 270% since the beginning of the year, forcing some firms out of business and threatening the future of others.
The spike has also caused problems for the production of carbon dioxide, a by-product of fertiliser production, with operations at two UK plants suspended.
The taxpayer could now pay tens of millions of pounds to subsidise a major US-owned fertiliser manufacturer to ensure the supply of CO2 for the food sector continues.
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Just days ago Prime Minister Boris Johnson insisted the price increase was largely down to a post-lockdown spike in demand, telling reporters: “I want to give a general reassurance that the problems we’re seeing are temporary.
“I have no doubt that supply issues will be readily addressed. We’re very confident in our supply chains.”
But Jonathan Brearley, chief executive of energy regulator Ofgem, disagreed with that during a session with the Business, Energy and Industrial Strategy committee hearing this morning.
"Have a look at the change in the gas price - it really is something that we don't think we've seen before at this pace," he told the MPs.
"We do expect a large number of customers to be affected, we've already seen hundreds of thousands of customers affected, that may well go well above that.
"It's very hard for me to put a figure on it."
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During today’s session at Westminster, Energy UK chief executive Emma Pinchbeck said she had known for some time that a crisis was possible.
“I took this job a year ago,” she explained. “When I was hired, the chairman of Energy UK said that your biggest challenge is going to be the vulnerability of the retail market.
“I know that for a year or more before that my team have been making the case to the regulator and the Government that the sector is fragile.”
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