Kwarteng vows energy supplies will be maintained as gas prices surge

Business Secretary Kwasi Kwarteng has said customers will be protected if more small energy companies go to the wall as a result of surging gas prices.

Following talks with the regulator Ofgem, Mr Kwarteng said he could appoint a special administrator to ensure power supplies were maintained in the event of further market failures.

His assurance came amid fresh warnings from the food and drinks industry of shortages on the shelves within days as a result of the knock-on effects of the price hike.

The increases have resulted in a dramatic cut in the supply of carbon dioxide (CO2), which essential to a range of products from poultry and pig products to the packaging used in salads.

Mr Kwarteng also met on Sunday with Tony Will, the global chief executive of CF Industries, the UK’s biggest supplier of CO2.

The company last week shut down two major fertiliser plants in Teesside and Cheshire, where CO2 is produced as a by-product, citing the high cost of natural gas.

Following their meeting, Mr Kwarteng said they had discussed the pressures the business was facing and “explored possible ways forward to secure vital supplies, including to our food and energy industries”.

However, the Food and Drink Federation chief executive Ian Wright warned that the impact of the shortages could be felt in the shops in a matter of days.

“Towards the end of the week to come and into the following week we are going to see really serious consequences,” he told the BBC.

“I would think that by the middle of next week – 10 days’ time – we would see a really, really big hit to poultry production, to pig producers and probably increasingly in other sectors – so in packaging materials and in bakery and drinks.”

Meanwhile, Mr Kwarteng is set to hold further talks on Monday with energy industry representatives and consumer groups as they grapple with the surge in gas prices, with wholesale costs up 250% since January.

Four small energy companies have already folded and, following his meeting on Sunday with Ofgem chief executive Jonathan Brearley, Mr Kwarteng said he had been assured that if another failed supplies would continue uninterrupted.

“Our priority is to protect consumers. If a supplier of last resort is not possible, a special administrator would be appointed by Ofgem and the Government,” he said in a series of tweets.

“The objective is to continue supply to customers until the company can be rescued or customers moved to new suppliers.”

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.

Mr Kwarteng acknowledged it was a “worrying time for businesses and consumers”, but said he remained confident energy supplies would be maintained.

“Energy security will always be our absolute priority,” he said. “The UK benefits from having a diverse range of gas supply sources – both domestic, and from reliable import partners such as Norway.

“I am confident security of supply can be maintained under a wide range of scenarios.”