Energy Regulator Boss Expects More Suppliers To Go Bust With Huge Gas Price Rise Here To Stay
The Ofgem chief executive has warned more energy suppliers will go bust during this gas price crisis (Alamy)
We cannot rely on the massive rise in gas prices being only temporary, which will lead to more suppliers will going bust, the boss of the UK’s energy regulator has told MPs.
Jonathan Brearley, chief executive of Ofgem, said "well above" hundreds of thousands of customers may be left in limbo as they deal with the crisis caused by increased demand and falling supply.
Appearing in front of the Business, Energy and Industrial Strategy Select Committee this morning, he said: "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."
Boris Johnson tried to reassure the public that any problems with the energy market were only “short-term”, but Brearley told MPs he believed the price rise may not be temporary.
"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 said.
Brearley said while “history has suggested these spikes go away, that’s not something we would rely on” in this instance.
The Ofgem chief also said people must be braced for suppliers to go out of business as they are unable to deal with far higher wholesale prices.
“We do expect more not to be able to face the circumstances we're in,” he said.
The chief executive of supplier trade body Energy UK said the government and Ofgem was warned as early as two years ago about the fragility of the sector.
Also appearing at the committee, Emma Pinchbeck, CEO of the trade association for the UK energy industry Energy UK said she had expected "the vulnerability of the retail market" to be a significant challenge faced by suppliers this year, and that this was "terrible news" for consumers.
"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," she said.
"There's a short-term crisis here, which is in some ways out of our control, it's to do with the gas prices, but it's been exacerbated and arguably caused by our regulatory design.
"That is a resilience and security of supply risk in the future. It's terrible news for customers in the long run.
"When we get through this, whatever support we put in place in the short term to make sure that customers are looked after, we desperately need to stop dismissing retailers when they say the market design is not fit for purpose, the market design is harming customers, the market design means we're not making any margin and the market design leaves us vulnerable and fragile."
PoliticsHome provides the most comprehensive coverage of UK politics anywhere on the web, offering high quality original reporting and analysis: Subscribe