Is government preparing to shake the magic money tree again?

Will my bath water still be hot by Christmas? That’s not a question I’d normally feel a need to share with you, but shortly after this morning’s ablutions I read that Bulb Energy — the UK’s sixth-biggest energy supplier with 1.7 million customers, including me — ‘is seeking a bailout to stay afloat amid surging wholesale gas prices’.

The spike in the global gas-price graph is extraordinary, up 250 per cent since the start of 2021 and steeper in August. It has many causes beyond our shores, including depletion of stocks last winter, restricted supplies from Russia, hurricane-hit US refineries and increased Asian demand post-Covid. But as this column has long argued, decades of policy dither by successive governments has left the UK peculiarly vulnerable in terms of energy security, and suddenly we see what that means in reality.

In summary, we import, from Norway or the Gulf, two-thirds of the natural gas we still need to generate 35-40 per cent of our electricity, while under-exploiting our own remaining reserves in the North Sea and onshore. Unlike European neighbours, we lack bulk storage for gas. Several of our nuclear reactors are currently shut for maintenance and the ‘interconnector’ in Kent that lets us buy electricity from France has been closed by fire. Summer winds have been too soft to turn the offshore turbines of which ministers are so proud.

Result: energy suppliers are trapped between soaring wholesale prices and Ofgem’s cap on rises for consumers. Many, including Bulb, could go bust if government does not save them. So what next? Should ministers revert to pandemic ‘whatever it takes’ mode, borrowing and subsidising without limit until global prices fall back again? Or let market forces rip? A massacre of energy companies combined with punitive winter fuel bills on top of spikes in many other prices won’t be a good look for our eager-to-please Prime Minister.