UK energy companies seek massive government bailout

[LONDON] United Kingdom energy companies are seeking a massive government bailout as a surge in gas and electricity prices threatens to push small unhedged suppliers out of business.

After emergency talks all weekend, Business Secretary Kwasi Kwarteng is to meet industry bosses later on Monday; time is pressing, as the chief executive of one energy supplier warned that it may not survive the winter without government help.

The UK's usual mechanism for dealing with failed suppliers - whose customers are transferred to a surviving company - may not work this time as surging market prices make it unprofitable for a company to take on more clients.

As for customers, they are protected for now by a price cap, which is adding to the pressure on companies, but that will be revised next year in a new risk to the inflation outlook.

The UK government is seeking data on energy companies' hedging positions as it tries to figure out which suppliers are able to take on the customers of failed suppliers, said two sources.

The more robust companies will be asked to take on extra customers, and talks are now focused on how much the government will pay and how big the hit will be to large energy companies.

BLOOMBERG