Industry leaders have called on government to help keep businesses and industries running as wholesale gas prices hit record highs.
The UK’s gas benchmark traded as high as 400p per therm on Wednesday, up 37 percent from the market close on Tuesday.
At the start of the year, the trading price was 60p per therm.
In recent weeks, the high price of wholesale gas has driven a number of UK energy firms out of business and halted production across industries.
Gas demand is high, and supply is limited, resulting in a rise in wholesale prices.
Steel production has already been halted “at times of peak demand,” according to the Energy Intensive Users Group, which represents steel, chemical, and fertiliser companies.
Because of the rise in gas prices, US-owned CF Industries shut down two UK sites that produce 60% of the country’s commercial carbon dioxide supplies last month, before the government stepped in to cover its operating costs for its Teeside plant for three weeks.
The scarcity of carbon dioxide, a byproduct of fertiliser factories, prompted food producers and supermarkets to issue warnings about fresh produce shortages. The gas is used to stun animals before slaughter and to extend shelf life in packaging.
“The impact of truly astronomical increases in energy costs on production in the fertiliser and steel sectors has already been seen,” said Richard Leese, chairman of the Energy Intensive Users Group.
“Nobody wants to see a repeat this winter in other industries, given that UK EIIs [energy intensive industries] produce so many essential domestic and industrial products and are intrinsically linked with many supply chains.”
We have reached out to the government for comment.
Customers face higher bills
Aside from industry struggles, nine energy suppliers have gone bankrupt in recent weeks, affecting nearly 1.73 million customers in September alone.
The companies that have gone bankrupt have mostly been smaller businesses that have been unable to keep price promises to customers due to the rise in gas prices.
Energy regulator Ofgem has informed affected customers that they will be switched to a new tariff and contacted by their new supplier.
It has advised people to take a metre reading and wait until a new supplier is appointed before switching to another energy company.
Ofgem CEO Jonathan Brearley has warned that the cost of protecting customers from failing energy providers may result in higher bills.
Costs are also expected to rise when the higher energy price cap goes into effect, with those on standard tariffs with typical household energy use seeing bills rise by £139 to £1,277 per year.
The energy price cap, which is the maximum price that can be charged on a standard tariff, protects customers from unexpected increases in gas prices.