The price of UK natural gas has topped records again, with contracts for next month now going for 238p per therm.
Prices are sky-high in Europe as well, as stockpiles of gas, coal and water for electricity production are scarce, while it seems the situation may not improve anytime soon as demand keeps rocketing but supply can’t keep up.
“We didn’t predict these prices coming,” Alex Grant, senior vice president at Equinor, told The Telegraph. “In the prices there is a risk premium for what might happen going forward and the risk is still very much dependent on gas supply.”
Meanwhile, Ofgem has asked insolvency experts from Teneo to be ready for a rescue plan in case a major supplier goes bust, Sky News reported.
Normally, the energy regulator would pick a new supplier to ensure customers can keep the light on and their credit balances remain protected.
The process is called ‘Supplier of Last Resort’; if it doesn’t work, Ofgem asks the government for an ‘Energy Supply Company Administration Order’ which would put in place a ‘Special Administration Regime’ (‘SAR’).
This is for cases where there is a fear that a large supplier failure could cause stress on the other supplier mandated to take on the failed company(s) customers. However, it’s a scheme that has never been used.
On Wednesday, it was revealed that Igloo Energy, Enstroga and Symbio Energy have folded but many more are expected to stop trading amid the gas crisis.
The UK had 71 suppliers at the start of the year including 55 small ones, but some industry commentators predict the latter number could shrink to ten.