The UK’s energy suppliers have urged for the creation of a so-called “bad bank” to absorb unprofitable customers from failing companies.
Firms have requested billions of pounds in emergency funding to weather a crisis caused by record wholesale energy costs.
Business secretary, Kwasi Kwarteng, held crisis talks with regulator Ofgem on Sunday and will meet with energy suppliers on Monday, according to the Financial Times.
There are concerns many smaller challenger companies could go bust in the coming weeks because of surging prices.
Wholesale prices for gas have surged 250 per cent since January, with a 70 per cent increase since August alone, according to industry organisation OGUK.
The business secretary is reportedly looking at the proposals for a “Northern-Rock style bad bank” and has accepted significant intervention may be required, above existing contingency plans.
Meanwhile, Prime Minister Boris Johnson tried to reassure consumers that the price hikes were “short-term” and faced by countries around the world.
Speaking from New York’s JFK airport, Boris Johnson said the situation would “get better as the market starts to sort itself out, as the world economy gets back on its feet.”
“We’ve got to try and fix it as fast as we can, make sure we have the supplies we want, make sure we don’t allow the companies we rely on to go under. We’ll have to do everything we can,” he added.
Business minister Kwarteng said “well-rehearsed plans” were in place to ensure consumers were not cut off, following the collapse of four energy firms.
Consumers would be protected from sudden price hikes through the Government’s energy price cap and supplies could be maintained, Kwarteng said.
Gas prices have soared because of multiple factors including depleted stocks after a cold winter, high demand for liquefied natural gas from Asia and a reduction in supplies from Russia.