MPs told of scale of energy crisis in hospitality

Earlier this week, MPs heard that some energy suppliers are refusing to pass on government discounts to restaurants, pubs and hotels who are already faced with significant financial struggles.

UKHospitality chief executive Kate Nicholls recently told MPs that, despite the government providing relief on energy bills for hospitality businesses, many energy suppliers are using their systems as an excuse to not pass on these discounts. This week, Ofgem has announced plans to gather evidence to get the full picture of what is happening in the energy market for these struggling establishments.

As Nicholls highlighted during her Business, Energy and Industrial Strategy committee appearance, “these are vulnerable businesses that need tight support right away and the biggest energy suppliers are not passing it through.” An additional problem lies in very few of them offering new contracts and many charging an unfair ‘blanket risk premium’ to hospitality operations.

With many hospitality businesses already struggling financially due to the current cost-of-living crisis, skyrocketing energy costs are causing even more harm. Reports confirm that some companies have seen a hike of up to 600% in their standing charges or have had to pay large security deposits before getting any contracts. Nicholls said that though there were some “very good guys” who had kept prices low for businesses but there was an “imbalance of power” between single-site independent operators trying to negotiate with large energy firms.

Ofgem said earlier this week that it would look at whether regulations required any change and investigate to see whether suppliers were complying with existing rules. The watchdog’s initial findings will be presented back to Chancellor Jeremy Hunt in time for the Spring Budget but is set to continue throughout the year due to the complexities of the non-domestic market.

Ofgem chief executive Jonathan Brearley’s acknowledged. “We understand that this is a very difficult time for many businesses…it is very important to me that we work with all stakeholders to understand and resolve issue in this market,” in his letter to Jeremy Hunt on Monday.

The rising energy prices could be a tipping point for many hospitality businesses, with many expecting their bills to rise by 832% when government support is reduced this April. For those affected, they are being forced to make tough decisions, including making cuts to the number of hours open per day and days open each week.

If you are a hospitality business worried your energy prices are going to skyrocket when government support comes to an end, know that help is available. At Beacon, we partner with experienced advisors who understand the commercial energy market inside out. They can provide objective advice and guidance on whatever contract best suits your needs - giving you the assurance that you’re getting the best deal for you situation during this period of volatility. Contact us today to learn more about how we can be your reliable partner in navigating the ever-changing market.

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