Government Vows to Support Consumers as Energy Bills Threaten to Soar
Energy minister Michael Shanks has declared that the government "stands ready to provide whatever support is needed to consumers" amid growing concerns that the ongoing Middle East conflict could trigger a significant surge in energy bills. The minister delivered this assurance while addressing the Energy Security and Net Zero Committee on Tuesday, responding to fears about the impact on household finances.
Reassurance on Energy Security Amid Uncertainty
During his testimony, Shanks sought to provide reassurance regarding the UK's energy supplies, stating that despite "some scaremongering stories" circulating in recent weeks, the nation benefits from very strong energy supplies derived from a diverse range of sources. He emphasized that gas supplies, for instance, are sourced from multiple locations that continue to operate normally, and he confirmed this status after recent discussions with the three LNG terminals.
"If we think about fuel it's really important to say that across the country we monitor very closely fuel supplies and there are no concerns at all about that fuel supply," Shanks told the committee. He added that the government keeps all aspects under review to ensure people can continue their daily activities, such as refueling cars, without disruption, which helps maintain normal supply operations.
Impact of Middle East Conflict on Prices
However, the minister acknowledged that the situation in the Middle East and the associated uncertainty undeniably affect energy prices. "There is no question that the situation in the Middle East and the uncertainty that that brings does have an impact on price," he stated. In response, the government has committed to fighting for consumers, focusing on de-escalating the conflict and providing support wherever possible.
When questioned about the future of Ofgem's price cap, which is set to expire at the end of June, Shanks noted that it is too early to predict specific outcomes. "We're at quite an early stage of what's called the observation window looking at the range of factors that will lead to that," he explained. He highlighted that the conflict's trajectory remains uncertain, making it premature to determine the exact impact on the price cap. Nonetheless, he reiterated that the government, along with the Chancellor and Prime Minister, remains prepared to offer necessary support to consumers as more evidence emerges closer to the cap's expiration.
Exploring Policy Costs and Long-Term Solutions
Committee chairman Bill Esterson raised the possibility of removing policy costs from energy bills, which currently account for £236 of the price cap, describing it as "a huge sum to play with." In response, Shanks indicated that this option is under careful consideration, but he cautioned about the trade-offs involved.
"We also have to invest, and this can be a trade-off where we're saying that we should simply take policy costs off with no consideration of the system we want to build for the future," he said. Shanks stressed the importance of balancing immediate consumer protection with the need to develop a sustainable energy system that ensures low bills in the long term. He mentioned that the government examines every component of energy bills and maintains regular contact with Ofgem to explore ways to reduce costs.
Additionally, Shanks pointed out that investing in renewables plays a crucial role in lowering bills by diminishing the influence of gas on wholesale prices. "Every single bit of renewables that we build helps reduce the role that gas plays in setting the wholesale price, and that reduces people's bills," he concluded, underscoring the government's dual focus on short-term relief and future energy stability.
