(Bloomberg) -- U.K. energy companies are seeking a massive government bailout as a surge in gas and electricity prices threatens to push small unhedged suppliers out of business.
After emergency talks all weekend, Business Secretary Kwasi Kwarteng meets industry bosses early afternoon local time on Monday. Time is pressing, as the CEO of one energy supplier warned it may not survive the winter without government help.
The U.K.’s usual mechanism for dealing with failed suppliers -- whereby customers are transferred to a surviving company -- may not work this time as surging market prices make it unprofitable for a company to take on more clients.
As for customers, they are protected for now by a price cap -- which is adding to the pressure on companies -- but that will be revised next year in a new risk to the inflation outlook.
- Companies are seeking a bailout from the government to help them handle the cost of taking on failed suppliers’ customers
- Kwarteng to meet energy firms at around 12:30 p.m. in London
- Centrica Plc shares fall
Green Says It May Not Survive Winter (8:30 a.m. London)
Green, a small energy supplier, says it may not survive the winter without government help.
“I feel without any support methods being put in place from the government is unlikely that we will see the winter through,” Chief Executive Officer Peter McGirr told the BBC.
The company serves more than 250,000 households.
Bills Seen Jumping 400 Pounds (8:20 a.m. London)
RBC estimates that bills could jump as much as 400 pounds ($547) a year because of surging prices.
“Electricity suppliers are now facing critical pressure against rising commodity prices,” RBC said in a note. “We see heightened risk for smaller, less well hedged energy suppliers to face bankruptcy in the event of this crisis, but we are mixed on if this presents a positive longer term opportunity for larger energy suppliers in the U.K. such as Centrica.”
Centrica shares fell as much as 1.9%.
Energy Chaos Adds to Inflation Angst for Europe’s Policy Makers
Europe Faces Bleak Winter Energy Crisis Years in the Making
Energy Crisis Brings Fresh Chaos for Battered U.K. Food Supplies
©2021 Bloomberg L.P.