Bonus harian di Keluaran SDY 2020 – 2021.
The Liberal Democrats say the government should consider setting up a Northern Rock-style nationalised energy company to take on the customers of energy firms that go bust.
Party leader Sir Ed Davey also called for a massive home insulation programme to help the UK prepare for the next crisis.
My colleague Andrew Sparrow has all the details in his Politics Live blog:
Business secretary Kwasi Kwarteng has tweeted following his emergency meeting with energy companies.
He says he’ll update MPs on the global gas price situation this afternoon, and that the government is looking at options to protect customers.
In any scenario, Kwarteng says, the government will ensure UK consumers have continuity of supply if their supplier fails, through a “Supplier of Last Resort” or a special administrator if needed.
And he states that the energy price cap will remain in place.
The UK government has said the energy price cap remains in place, and will save consumers money over the winter months.
A spokesman for the Prime Minister told reporters:
“The price cap remains in place, as I say, to protect consumers from sudden increases in global gas prices and it will save them money this winter.”
Asked whether the cap could change between October and the next review date in April 2022, he added:
“I’m not aware of any proposed change to the price cap.”
No 10 also insisted the UK food chain is “incredibly resilient”, despite warnings that the lack of CO2 could lead to shortages
The PM spokesman said:
“We’ve got a highly resilient food supply chain in the UK, we’ve seen that throughout the pandemic, and we will obviously continue to work with industries that are facing issues to ensure that remains the case.”
“As I’ve just said, we have an incredibly resilient supply chain when it comes to food and we’re well prepared to handle any potential disruptions.”
Those CO2 shortages are caused by the closure of large fertiliser plants in Teesside and Cheshire by CF Industries last week.
Asked if there was a contingency plan to help CF Industries, the PM’s spokesman said:
“We have a highly diverse source of supplies but, as I say, [business secretary] Kwasi Kwarteng has spoken to the company involved over the weekend and will consider any contingency plans as appropriate.”
[Thanks to PA Media for the quotes]
The UK government can consider several alternative initiatives to address the threat of energy suppliers facing collapse, says Becca Aspinwall, energy market specialist at law firm Pinsent Masons.
However, they’re not straight forward, and many will impose costs on consumers or taxpayers….
“It will be interesting to see to what extent government is willing to prop up the smaller energy companies as opposed to supporting the bigger players in taking on unprofitable contracts. The last decade has seen a real boom in energy suppliers so if these collapse there will be considerable strain on remaining energy providers.
Other options that suppliers and government are likely to be considering include raising funds from investors, merging or entering into joint ventures, and amending the price cap to enable suppliers to pass through increased costs to end customers. All these options are not straight forward so the government will need to move quickly but whatever interventions are implemented, it is likely that either the consumer or the taxpayer (or both) will bear a significant proportion of the costs, which will not be welcomed as we approach winter.”
The US stock market is still heading for sharp falls when trading begins, in around two and a half hours:
Greg Jackson, CEO of energy company Octopus, has called for market reforms to “ensure that companies are properly run” and blamed “idiot companies” for offering too-low prices.
He says companies must hedge their energy demands for the duration of a contract, to protect them against a spike in wholesale market prices.
Unions are warning that the UK’s energy market crisis could get worse in the months ahead.
Sue Ferns, Prospect senior deputy general secretary, says jobs are also at risk:
“Despite government protestations, it is clear that the UK energy market faces a crisis that could get even worse during the winter months.
“Prospect warned over a year ago of the precarious position of energy retail companies but sadly nothing has been done to forestall the current problems.
“It is now all too clear that the limitations of the market will hit energy customers at a time when many are already under severe financial pressure. Anticipated company failures will also bring job losses and will impede the capacity of larger suppliers to provide advice on energy efficiency and household climate adaptations necessary to achieve net zero.
“This is a wake-up call for the Government which must intervene immediately to ensure short-term security of supply. The current crisis is a product of an overreliance on imports and weather-dependent renewables leaving us dangerously exposed to fluctuations in global natural gas markets. The UK must prioritise domestic sources of firm power, particularly nuclear, to ensure a secure, resilient and low carbon future.”
Norway will allow state-controlled Equinor and its partners to increase gas exports from two offshore fields for the next 12 months amid concerns over a shortage of European gas supplies that have sent prices soaring.
Reuters has the story:
Equinor, Europe’s second-largest gas supplier after Russia’s Gazprom, said on Monday the government was allowing a combined 2 billion cubic metres (bcm) increase in exports for the gas year starting Oct. 1 from the Troll and Oseberg fields.
The increase corresponds to nearly 2% of Norway’s annual pipeline gas exports, according to Reuters calculations.
The front-month gas price at the Dutch TTF hub, a European benchmark, has more than tripled this year to record levels, driving up power prices as the winter heating season approaches with below-average levels of gas in storage.
The situation is prompting Britain to consider state-backed loans to energy firms and big suppliers to ask for government support to cover the cost of taking on customers from companies that have gone bust.
“We believe that this is very timely as Europe is facing an unusually tight market for natural gas,” said Equinor. “We are working on measures to increase exports from our fields on the Norwegian continental shelf.”
More here: Norway to raise gas exports to Europe as prices soar
Anxiety over the global economy has helped to pull the oil price down.
Brent crude is down 1.9% at $73.90 per barrel, amid concerns that high gas prices and the Evergrande crisis will hit global growth. US crude has also lost 1.9%, to $70.60 per barrel.
The stronger US dollar, the gradual restart of Gulf of Mexico oil production after two hurricanes, and jitters ahead of the US Federal Reserve meeting on Wednesday are also factors.
Ricardo Evangelista, Senior analyst at ActivTrades says:
The greenback [US dollar] started the week on the front foot, trading at its highest for three weeks, as investors fear the fallout from the developing situation in China, where Evergrande, one of the country’s largest construction firms, is at risk of defaulting on debt repayments, triggering a bout of risk aversion in the financial markets and driving demand for the safe haven dollar.
In addition to the safe-haven trade, the greenback is also supported by investors’ expectation that the Fed could announce the beginning of the tapering of its asset purchases later this week.
China is also facing the threat of power shortages this winter, as the global energy supply crunch pushed up fuel costs.
It could leave power plants struggling to buy enough coal and gas.
Bloomberg explained last Thursday:
China is staring down another winter of power shortages that threaten to upend its economic recovery as a global energy supply crunch sends the price of fuels skyrocketing.
The world’s second biggest economy is at risk of not having enough coal and natural gas — used to heat households and power factories — despite efforts over the past year to stockpile fuel as rivals in North Asia and Europe compete for a finite supply.
Demand for heating will jump when temperatures turn colder over the next few months, which could trigger power rationing similar to those seen last winter and over the summer.
An energy deficit and sky-high prices could wreak havoc on Chinese industries, exacerbating faltering economic growth after stringent virus controls cut consumer spending and travel. In a worst case scenario, households may be unable to stay warm during bouts of frigid weather, although analysts say the government would sacrifice factory output to keep residential homes supplied.