Energy regulator Ofgem is being urged to immediately intervene in the non-domestic energy market as businesses struggle with extortionate costs and a looming reduction in Government support.
In a letter to Grant Shapps MP, secretary of state for Energy Security and Net Zero, UKHospitality has reiterated the pressing need for Ofgem to take suppliers to task for their unscrupulous behaviour towards hospitality.
If the government is unable to do so, UKHospitality is calling for a three-month extension to the Energy Bill Relief Scheme for sectors recognised as energy intensive, and therefore vulnerable. And it says that hospitality should be among them.
Almost half of businesses in the sector (48%) are contending with energy bills fixed at record high prices during the height of the energy crisis, between July and December last year. With government support significantly diminished from April, this represents a ‘terminal’ double-whammy for the sector.
UKHospitality is urging the government to instruct Ofgem to:
- Enforce the renegotiation of contracts signed between July and December 2022, penalty-free, with the support of deposits already taken;
- Enact full regulation of the non-domestic energy market if suppliers are not willing to act;
- Reset security deposits to reflect falling prices and increase business liquidity; and
- Introduce a government-backed trade credit insurance scheme for sectors that suppliers perceive to be high-risk.
In the letter, UKHospitality chief executive Kate Nicholls writes: “Half the businesses in our sector will be locked into extortionate prices as energy support is significantly reduced from April. This could have a potentially terminal impact on thousands of businesses that are simply unable to afford their bills.
“We appreciate that government has had to take tough decisions to stabilise the nation’s finances, and that is why the onus has been put on Ofgem. We welcomed this direction, but have concerns about the extent of Ofgem’s powers and their ability to act at the pace necessary to provide the support businesses require.
“We need to see Ofgem take action on non-commodity, service, and access charges, as well as security deposits and terms of supply, which undermines government support. Evidence we have seen from businesses demonstrate refusals to supply, blanket risk applied to sectors, 600% increases in standing charges, and widespread use of security deposits.
“Without action, we believe the only alternative is to extend the Energy Bill Relief Scheme — either across the economy or for specific sectors — for a further three months.”
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