Britain is considering offering state-backed loans to energy firms after wholesale gas prices soared, prompting big suppliers to ask for support from the government to cover the cost of taking on customers from companies that have gone bust.
Wholesale gas prices have risen in recent months as economies reopen as the Covid-19 pandemic eases and high demand for liquefied natural gas (LNG) in Asia pushed down supplies to Europe.
This has resulted in quirks such as a shortage of carbon dioxide.
The rise in prices has already forced four small energy suppliers to cease trading in recent weeks and Business Secretary Kwasi Kwarteng held emergency talks with executives from National Grid, Centrica, EDF and the regulator Ofgem on Saturday.
"If a supplier fails, Ofgem will ensure customers' gas and electricity supply will continue uninterrupted," Kwarteng said on Twitter.
"If a supplier of last resort is not possible, a special administrator would be appointed by Ofgem and the Govt. The objective is to continue supply to customers until the company can be rescued or customers moved to new suppliers," he added.
Kwarteng said he would hold meetings with the energy industry and consumer groups today.
Britain's largest suppliers are requesting a multi-billion-pound emergency support package from the government to help them survive the crisis, including the creation of a "bad bank" to absorb potentially unprofitable customers from failing rivals, The Financial Times reported.
The BBC reported that the UK government was considering state-backed loans to keep firms afloat.
A source at one large energy company told Reuters firms were beginning to be more hesitant about taking on new customers through regulator Ofgem's supplier of last resort scheme.
Under the scheme energy firms bid to take on the customers from those companies that have gone bust, usually offering to honour any outstanding credit.
Companies typically hedge their customer's needs many months in advance so taking on new customers at this stage would likely mean buying their energy at the current elevated wholesale price, which is much higher than they are allowed to charge under the price cap.
"Ofgem continues to work closely with government and industry to ensure consumers continue to be protected while global gas prices are high and will speak further on these issues at the industry roundtable today," Ofgem said.
Surging gas prices have led to an array of stresses in other markets, including a shortage of carbon dioxide after fertiliser plants had to shut.
Carbon dioxide is used to stun animals before slaughter and prolong the shelf-life of food.
Kwarteng also met Tony Will, chief executive of CF Industries, the country's largest domestic supplier of CO2.
Benchmark wholesale British gas prices have more than trebled this year to record highs due to several factors including low stock levels, strong demand in Asia making it more difficult to attract LNG cargoes and maintenance issues at key infrastructure.