Restaurants, pubs and bars are being hit with 600% rises in standing charges with “absolutely no justification or explanation”, according to UKHospitality.
In a letter to the Energy Secretary Grant Shapps, leaders in the hospitality industry called for the government to instruct Ofgem, the energy regulator, to enable energy contracts signed when prices were higher last year to be renegotiated, due to wholesale prices now being lower.
UKH CEO Kate Nicholls said half of businesses in the sector were locked into high-price deals and warned that thousands might not be able to afford bills when support is reduced from April.
She said if Ofgem could not enable businesses to be able to switch to cheaper deals, then the government should step in and maintain help at current levels, as it is expecting to do for households in next week’s Spring Budget.
Chris Jowsey, the CEO of Admiral Taverns, called for energy firms to be held to account to “make sure they are not profiteering”.
He warned “onerous” energy contracts put many pubs at risk of closure.
Alex Reilley, chairman of Loungers, tweeted: “The stories I’m beginning to hear about the behaviour of energy firms with regards to hospitality energy contracts reminds me of when businesses were forced into interest rate swaps and then the banks colluded to rig LIBOR. This cannot be allowed & the govt has to take action.
William Lees-Jones, MD of JW Lees, urged the government to act, tweeting: “You really need to do something about OFGEM and unwinding some of these contracts forced on people by unscrupulously brokers - I’m hearing of contracts at more than 60p when market is predicted to be at 15p by April.”
The British Beer and Pub Association said its members had reported costs “being layered onto bills”, with extra costs including large deposits up front.
The Federation of Small Business (FSB) estimates more than 350,000, or 28% of small businesses who signed fixed tariffs last year, could need to shrink, restructure or close if their bills revert to the higher rates in April.
Two leading Devon businesses, featured on the Morning Advertiser’s Estrella Damm Top 50 Gastropub, have closed their doors blaming sky-rocketing energy bills - The Cadeleigh Arms in Tiverton and Five Bells Inn near Cullompton.
From April, the current level of government support on commercial energy bills is set to be scaled back.
The price of wholesale gas, which is what suppliers pay gas companies, has fallen in recent months from record levels last year.
Energy regulator Ofgem told the BBC it was aware some businesses were being asked to pay additional costs, and said it was looking to see if action was needed.
The government said Ofgem’s review into the behaviour of energy suppliers would include whether the regulator requires more powers.
It said the energy support for businesses meant they were paying around half of predicted wholesale energy costs this winter.
