Gas prices are currently about double what they were six months ago. This impacts directly on domestic gas supplies and is a material part of the cost of electricity generation.
Government policy did not anticipate the rapidity of cost changes. If energy companies supply at the capped tariff they will lose money. Taking on the remaining term of existing customer long term contracts is even less attractive.
The only issue is how the problem is dealt with, how it is presented and who pays. The government could:
- simply say to consumers "your energy supplier has gone bust, you sort it out".
- immediately raise the price cap to ensure energy companies can cover their costs. All consumers coming out of existing contracts would face a material price hike.
- directly subsidise energy companies to take on contracts - very obviously a case of taxpayers money being used to prop up energy companies.
- temporarily take on failed energy companies and run them until (a) they can offload them on to a new buyer, or (b) simply run it down as existing customer contracts mature.
They are all unattractive - they have simply picked that which may be least worst!
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