An unprecedented rise in the price of gas has sent shock waves through the UK energy market, forcing energy suppliers out of business, threatening massive increases to customer bills and provoking government bailouts of carbon-dioxide producers integral to the food supply chain.
Speaking about the issue, Unison’s national officer for energy Matt Lay said: ‘There has been a significant global increase in the wholesale price of gas. It’s down to a lot of reasons but mainly, demand is greater than supply.
‘The UK is a big consumer of gas, not just for home consumption, but also in terms of electricity production, around half of the UK’s electricity supply comes from gas-fired electricity plants.
‘So, this isn’t just about the price of consumers’ gas or central heating, it’s going to affect their electricity as well, we’re talking about hundreds of pounds a year increase.
‘To put it very simply, energy suppliers buy electricity and gas from the wholesale market and sell it on to consumers.
‘This has been coming for a few weeks now, prices are continuing to rise and it’s likely that they’ll stay high.
‘There is a finite amount of gas in the system, and if there’s more demand for it, it will go to the highest bidder.
‘The issue has come into particular focus this week because some smaller energy suppliers are starting to go out of business.
‘They can no longer afford to supply customers at the price which they agreed because they would have to buy the electricity and gas at a substantially higher price.
‘Over the last decades, the government and energy regulator Ofgem have really encouraged the fragmentation of the market, believing it will bring down prices for consumers.
‘The smaller companies, who popped up to compete with the larger, legacy suppliers, companies like British Gas or Eon, have been selling energy at tiny margins or even at a loss and they tend to buy energy at the same time that they sell it.
‘This has put a lot of pressure on the legacy suppliers who have the biggest fixed costs, mainly staffing, and tend to buy energy well in advance which insulates them from price spikes.
‘The smaller suppliers could manage when gas prices were falling or, at least, not keeping up with inflation, but now their business model has become completely unsustainable, and they are rapidly going bust.
‘A lot of people in the industry think we’re going to go from 50 suppliers in the market this year to somewhere nearer a dozen next year, and the legacy suppliers are the only ones who are going to be able to take on customers from those companies going out of business.
‘Nevertheless, even the legacy suppliers will struggle in this market and the bill payer is going to be the one picking up the tab.
‘They might not see it yet, but they will in the next round of tariffs.’
‘Firstly, for those who work in the industry, membership is primarily in the legacy suppliers, there is going to be considerable disruption and uncertainty and it’s not going away any time soon.
‘Secondly, all our members are consumers.
‘They’re going to see their energy bills rocket and, with the increase to national insurance and a lack of sufficient pay rises across the public sector, this is going to hit the poorest among them very hard.
‘Finally, it’s going to have an effect on public services. For example, the NHS is an enormous energy consumer, and they won’t have budgeted for this type of increase. It’s going to squeeze their budgets hard causing a knock-on impact on our membership. It could have been prevented.
‘Unison has been talking for a long time about focussing on energy demand, rather than its price.
‘In the context of net-zero targets, we think you can kill two birds with one stone.
‘Take the focus off the price and put it on reducing a household’s consumption of energy, therefore reducing the size of bills.
‘We argue for a national programme of energy efficiency measures, a door-to-door approach, get every home to an energy performance rating C at least and supporting every consumer in reducing their energy consumption without compromising comfort levels.
‘By doing that we cut their bills, improve living conditions, systematically eradicate fuel poverty and avoid many of the health issues caused by poor housing.
‘We don’t want people to just put another jumper on.
‘Right now, the government must intervene to support consumers, particularly those on low incomes, because they won’t be able to afford this.
‘We’re talking about a lot of people going cold this winter.
‘In terms of other support, it’s important that consumers also know the resources out there.
‘Unison has its own charity – There For You – but it is worth knowing that the big energy companies generally do have their own help available as well.
‘The critical thing is, if somebody is struggling with their energy bills, get in touch with one of these at the earliest possibility.’
Unison General Secretary Christina McAnea said: ‘The government’s lack of an energy plan has made a bad situation much worse.
‘Allowing the market free rein, with multiple energy suppliers fighting for consumers, was always going to end in disaster.
‘Millions of low-income households are feeling the strain of the growing cost of living crisis.
‘Ministers should consider taking the retail energy suppliers into public ownership and start buying energy on behalf of UK homes and businesses.’
Dave Wiltshire, Secretary of the All Trades Unions Alliance, commented: ‘The only urgent alternative to private ownership is for these companies to be taken over by the working class.
‘This is the very demand that union and Labour leaders are terrified of and instead resort to useless appeals to the Tories for “alternative ownership structures”.
‘The only solution to the crisis for the working class is the complete nationalisation, without compensation, of gas, electricity and every other industry that has been systematically pillaged by the privateers and placing them under the management of the working class.
‘This requires the working class to take power.
‘The trade union leaders who refuse point blank to lead this struggle must be thrown out and replaced by a leadership prepared to mobilise the strength of the working class in a general strike to kick out the Tories and go forward to a workers government that will expropriate the bosses and advance to a planned socialist economy.’
