UK News Energy bills to soar after fire shuts down France-UK power cable
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Households and businesses face a tough autumn and winter after a fire at a power facility in Kent sent gas prices soaring to record highs.
Natural gas rose by as much as 18 per cent to 189p per therm after the blaze at the interconnector, which links the British and French power grids.
Last night National Grid warned that the disruption is expected to last until March, raising fears over tight supplies in the coming months.
One expert warned that the country could face blackouts if alternative sources of energy such as coal could not cover the shortfall. However, others said this was unlikely.
Business Secretary reassured that gas supply ‘not cause for immediate concern’
He said that protecting customers from huge price rises was ‘an absolute priority’.Kwasi Kwarteng had said energy security is “an absolute priority” as he prepared to hold talks on Saturday amid concerns about a rise in wholesale gas prices.
Yesterday the incident intensified a spike in prices, which have already been surging due to a toxic cocktail of lower supplies from Russia, lack of gas in storage in Europe and spiralling prices for liquefied gas shipped in ocean tankers.
The 189p per therm is more than double the amount paid two months ago, and a fourfold increase on September 2020.
The price crunch is likely to pile pressure on families and companies during a crucial period of the post-Covid recovery.
Bills for domestic customers not on fixed tariffs could jump, though those on standard tariffs may not see a rise until the price cap is reviewed next spring.
But energy-heavy businesses such as manufacturers are feeling the heat, warning that companies are being forced to temporarily suspend production and could need to ration power.
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The Cop26 president said ministers 'don't see any risks going into the winter' from a spike in global gas prices that prompted the closure of two industrial sites vital to the food and drink industry. Business Secretary Kwasi Kwarteng will tomorrow hold an emergency summit with energy bosses after the closure of fertiliser plants in Teesside and Cheshire.A by-product of the fertiliser production process is the creation of carbon dioxide. It is used in fizzy soft drinks and beer, as well as by the meat industry to stun animals before slaughter, in food packaging to extend shelf life and to keep deliveries chilled.
It has also raised concerns about supplies. The coal station West Burton A was fired up earlier this month to meet electricity needs after a drop in wind.
But Tom Edwards, of Cornwall Insight, warned that ‘if anything goes wrong, we might not have anything left in the back pocket’.
He added: ‘If a nuke trips offline or something else big, that could cause issues because we might not have anything to replace it.’
Verity Davidge, director of policy at manufacturers’ association Make UK, said unprecedented energy costs ‘risk putting the brakes on any recovery’.
Davidge added: ‘Around two-thirds of manufacturers are saying they are now feeling the impact of energy price rises which when combined with inflation burdens, increased cost of raw material and wage pressures are coming together into a perfect storm to halt the green shoots of recovery so desperately needed in the sector.’
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Gareth Stace, director general of UK Steel, said extortionate power prices were already forcing some steel makers to suspend their operations.
The latest price jump brings back into focus the decision in 2017 to close the UK’s main gas storage site, which European leaders urged ministers to reverse.
This cut the UK’s storage capacity from 15 days of winter demand to just four or five days, a move that depended on getting energy through undersea cables and liquefied gas imports.
Britain relies on six interconnectors that bring electricity into the UK – though the Government is keen to build more.
The IFA 1, which was still on fire last night, brings in two megawatts per hour, enough to power 2m homes and more than the total amount generated by wind in the UK. It was working at half-capacity, or just one megawatt per hour, when hit.
European countries that have been unable to top up their own gas supplies after a cold winter and lower feeds coming from Russia could consider cutting off the UK’s access.
Experts have also warned that the price rises are making more small energy suppliers even more vulnerable.
Tom Lyon, the director of energy at Energy Helpline, said that in ‘a worst-case scenario’ more could go bust.
MPs demand 20% VAT is scrapped on energy bills amid gas price crisis .
Tory MPs suggested a move similar to that given to hospitality firms during the Covid lockdown, when the regular 20 per rate was cut to just 5 per cent. Downing Street today signalled it is bracing for a 'winter of discontent' after BP and Tesco were forced to ration fuel and shut stations, supermarkets warned of food shortages and more energy firms went bust amid rising gas prices.Number 10 said this afternoon that 'we acknowledge there are issues facing many industries across the UK' as the nation heads into the colder months.