City-region Night Time Economy lead calls for Ofgem to intervene on business energy bills

Greater Manchester’s Night Time Economy lead, Sacha Lord, has called on Ofgem to intervene following the end of government support for business energy bills.

Commenting to the Manchester Evening News on the £32,000 bill being faced by one North Manchester pizzeria, he warned of the impact being felt by the hospitality sector as business energy customers are returned to unregulated high unit prices by suppliers following the end of the government’s Energy Bill Relief Scheme, introduced in October last year.

The Night Time Economy lead echoed sentiments of the British Beer and Pub Association (BBPA), which has warned the average UK pub faces an increase in the annual energy bills of £18,400. The organisation has called on government to allow a renegotiation window for pubs and breweries tied into paying prices above market rates as a result of being tied into pre-existing energy contracts. The BBPA also warned that many energy suppliers were adding to the pain being felt by the sector with increases to non-energy costs, changes to terms and conditions, and in some cases, refusing to deal with hospitality customers entirely.

While household bills have remained capped at £2,500 per year for the average household, business customers have been returned to prices fixed by contracts agreed last year when wholesale energy prices were rising. Businesses are now facing either high unit costs for their electricity once again, or facing large one-off payments to break contracts now that prices have begun falling.

In a statement to the MEN, Sacha Lord said:

“For months now, we have witnessed the big energy firms posting their highest profits on record. At the same time, hospitality operators, not just in Greater Manchester, but across the whole of the UK, felt pressured into signing long term contracts which locked them in, in order to benefit from the Government Support.

“Ofgem are a body set up to protect the consumer. They have been repeatedly warned both what was happening and also the cliff edge that is coming this Friday, on their watch. To say they have been useless would be an understatement.

“I know of many operators who are now having to reduce hours or even close, due to untenable energy bills. This was on Ofgem’s watch. On their watch, businesses are closing and people are losing their jobs.”

Emma McClarkin, Chief Executive of the British Beer and Pub Association said:

“If these [high energy] costs were passed on at the bar it would push prices for customers through the roof. Our pubs and brewers are doing everything they can to limit the impact of these baked-in higher costs on consumers but it’s becoming increasingly difficult to do so.

“With no action on energy for businesses, the simple fact is thousands of our pubs and brewers will be at risk of closure come 1st April and will be lost from communities across the country forever.

“We need the Government to step in give businesses in the “pain zone” of sky-high contract rates a window to renegotiate and bring those costs down. It’s clear a fair and sustainable energy market for businesses as well as consumers is needed before it’s too late.”

In Stockport, casualties of rising costs for hospitality businesses, coupled with falling demand due to the tightening of residents’ personal finances, have already been seen. Joseph Patten, owner of four popular bars in the town centre, confirmed yesterday that two would be closing their doors for the last time due to the pressures facing the sector, with Doctor Feelgood and The Glass Spider, both in the Market Place area of the town centre.