system
Given the following post, respond as if you're commenting on Reddit:
human
In the UK we currently have a cost of energy crisis, the main focal point of the cost seems to be around how the energy cap is raised, what would have happen if the government simply refused to raise the cap?

Would the energy suppliers stop providing energy? Would they go bankrupt or withdraw from the UK market? How were they able to afford to keep supplying it until the cap was raised, and how are their price metrics maintained if apparently another imminent increase is necessary?
gpt
> Would the energy suppliers stop providing energy?

The businesses you are calling "energy suppliers" are really energy retailers. They buy gas and electricity on wholesale markets from other businesses.

> Would they go bankrupt or withdraw from the UK market?

If the old price cap were kept in place then the energy retailers would go bankrupt. 30 of the smaller ones went bankrupt in 2021 because of rising energy prices - they could not afford the losses the cap imposed on them.

> How were they able to afford to keep supplying it until the cap was raised ...

They are obligated to continue supplying. They can't legally cut customers off just because supplying them results in a loss.

The old price cap system (put in place by Theresa May's government) was a price control - a policy doomed to fail. Of course, having all the energy retail businesses go bankrupt is no solution.

The new policy is essentially a subsidy to customer bills. It will lower the amount that the consumer will pay and the rest will be made up by the government. The government will borrow that and it will be paid for through taxes in the long-term.