Gas companies may face unexpected tax as energy crisis hits households | energy industry

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Another 800,000 households fell victim to the energy crisis on Wednesday as other suppliers collapsed, as ministers admitted they were considering an unexpected tax on companies taking advantage of record gas prices.

Avro Energy and Green’s failure means that seven energy companies have gone bankrupt in just over six weeks, with a total of more than 1.5 million households now being switched to a new supplier and forced to pay hundreds of extra pounds for gas. and electricity annually.

Avro Energy and Green’s failure means that seven energy companies have gone bankrupt in just over six weeks, with over 1.5 million households now forced to look for a new supplier and forced to pay hundreds of extra pounds for gas and electricity a year.

With rising gas prices threatening the survival of all but the largest companies, Business Minister Kwasi Kwarting warned that the government should prepare for “high prices in the long term”, and consider “all options” to tackle the crisis.

Speaking before his address to the United Nations General Assembly in New York, Boris Johnson said the crisis is “the growing pain of the global economy coming back to life”.

Pressure is mounting on ministers to find ways to provide some financial support to families, who are set to be hit by an increase in bills of £139 next month – some of the most expensive energy bills on record.

Combined with a £20 universal credit cut and rising inflation, Labor and some Conservative MPs have warned of a potentially disastrous cost of living crisis.

On Wednesday, the Joseph Rowntree Foundation estimated that the typical low-income household would be around £1,750 worse by next April.

The energy market shock also raised concerns about UK consumer supply chains and heavy industries such as steel, reigniting fears of empty supermarket shelves before Christmas and a return to a three-day week for factories.

Government options include taking money from gas companies, major power generators and traders to help protect the millions of families whose energy supply is likely to fail this winter.

Jillian Cooper, head of energy at Citizens Advice, said the recent failures “will add to people’s fears at an already very worrying time”.

“The collapse of suppliers and rising energy prices, along with the impending cut in universal credit, are creating a tremendous amount of uncertainty for millions of people,” she said.

Jonathan Brierley, CEO of Ofgem, added that recent gas price increases in the gas market have been “something we don’t think we’ve seen before, at this pace”.

“We expect a large number of customers to be affected. We have already seen hundreds of thousands of customers affected. It could be much higher,” he said.

Emma Pinchbeck, chief executive of Energy UK, added that the crisis had exposed the vulnerability of the country’s retail energy sector, meaning that even “good, well-run companies will fail”.

Kwarteng told MPs on Wednesday that the government was studying the Spanish government’s plan to levy an unexpected €3 billion (£2.58 billion) tax on generators and power dealers who would benefit from the energy crisis while homes and energy suppliers struggle.

“We are looking at all options. I think what they are doing in Spain is acknowledging that it is a complete system. We are in discussion with [energy regulator] “Ofgem officials are looking at all options,” Kwarteng told the business selection committee.

Avro Energy, based in Hinckley in Leicestershire, has become the largest supplier to go bankrupt after leaving 580,000 families stranded, while Newcastle-based Green has left more than 250,000 customers behind.

Green collapsed just days after admitting it would struggle to survive the winter if the government refused to provide any subsidies to smaller energy suppliers.

Green’s CEO, Peter McGuire, told the Guardian there would be “more tsunami than that” [collapses] That comes “because small suppliers don’t have pockets deep enough to get through rising costs without passing them on to their customers.

The government is considering paying the largest energy suppliers to bear the cost of picking stranded customers, but has said it is not willing to pay to support failed energy companies.

“What I don’t want to do is give taxpayers money to companies that entered the market only to get out of the market a year later. I don’t think that’s responsible,” Kwarteng said.

In total, nearly two million households lost their suppliers this year, and that number is expected to rise in the coming months. Industry insiders expect the number of suppliers in the market to shrink from 70 at the start of the year to about 10 by the end of winter.

Rising energy market prices have already brought the steel and fertilizer businesses to a standstill, and threatened to disrupt the supply chain of carbon dioxide critical to the UK’s food, beverage and meat industries.

After days of increasingly desperate warnings from retailers, butchers, brewers and soft drink makers, ministers were forced to shore up the US chemical giant to restart its Teesside fertilizer plant — to ensure vital supplies of carbon dioxide start flowing again.

Environment Minister George Eustice has admitted that this rescue deal will cost taxpayers millions of pounds, and will likely drive up shoppers. However, this deal only lasts for three weeks, and ministers have been unable to set a total price for the cost of supporting the plant.

Regarding the deal, Johnson, who declined to say whether government support could continue beyond the three-week period, said: “It’s a once-in-a-century pandemic and we have to deal with it in all sorts of extraordinary ways. That’s just another part of it.”

CF Fertilizers supplies food-grade carbon dioxide as a by-product of fertilizer manufacturing, with biogas to food and packaging companies. Eustis said, “The reason they justify it to the government is… If we don’t, there will be a risk to the food supply chain. It is not a risk the government is willing to take.”

Richard Griffiths, chief executive of the British Poultry Council, said the deal was a “huge relief” for the industry as there were only a few days to run out of CCO2, which is used to slaughter birds, but added that the higher cost of producing gas would “ultimately feed into food prices.” “.

“I’m confident we can get other sources of CO2 in that period, there was an immediate crisis, and the deal we came up with solved the immediate problem,” Kwarteng said.

Rising energy prices and carbon dioxide shortages have put additional pressure on already understaffed supply chains, leaving retailers to demand urgent action from ministers to help them fill gaps in their workforce.

The shortage of heavy-duty truck drivers, estimated at 100,000, has left gaps on shelves and forced grocers to offer generous push deals to lure carriers.

However, Kwarteng has rejected petitions from the food and drink industry for a short-term visa scheme to hire workers overseas, including heavy truck drivers, to ease disruption to the food supply chain, which has asked them to hire and retrain British workers instead. .

Britain’s largest supermarket has warned that the sector could be hit by panic buying in the lead-up to Christmas unless urgent action is taken to fix the shortage of heavy truck drivers.

“Our concern is that the images of empty shelves are going to get ten times worse by Christmas, and then we panic buying,” Andrew Wolfenden, Tesco’s director of distribution, told ITV.

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