150% hike in pubs’ energy bills

03-Mar-2022 - Last updated on 04-Mar-2022 at 15:09 GMT

Hospitality businesses see 150% increase in energy cost: some suppliers now refusing contracts to businesses in the sector (Credit: Getty/John Lamb)

Related tags Energy costs Finance Legislation Bbpa

Hospitality businesses across the UK have seen energy bills rise by 150% or more when compared to pre-pandemic levels, equivalent to an £800m additional cost to the sector, according to the British Beer & Pub Association (BBPA).

Throughout the pandemic the hospitality sector has faced ongoing energy issues, with some now being refused contracts from suppliers, placing them under additional financial burden as the industry looks to recover from the pandemic.

Further financial hurdle

BBPA chief executive Emma McClarkin said: “Struggling publicans that have managed to keep their heads above water throughout the pandemic now face a further financial hurdle that threatens the viability of their businesses and the ability for the sector to recover.”

On average, businesses reported an increase of above 100% with cost increases on this scale potentially wiping out already narrow margins for publicans, as well as having a knock-on effect on pricing.

In addition to risk premiums and significant up-front renewal deposits, over recent months there has also been an increase in the number of utilities providers refusing to take on new accounts or renew contracts if they are linked with hospitality.

Survey

Have you been refused a contract by your energy supplier?

Yes
39%
No
61%

Some providers have initially quoted for a business but then reneged on signed agreements, leaving companies with little or no choice to secure a new provider, according to the BBPA.

Where pubs are split between domestic and non-domestic energy consumption, a refusal to supply energy raises serious concerns, and is failure of the energy providers to satisfy the obligations they are subject to under the authority of the Energy Ombudsman.

Pivotal point of recovery

McClarkin added: “The pub and brewing sector is at a pivotal point in its recovery and the erosion of margins is impossible to sustain.

“We are urging the energy regulator, the providers and the Government to work with us and take a more pragmatic approach with regards to the provision of energy to the hospitality sector.”