Pubs refused energy contracts as sector deemed 'risky'

By Rebecca Weller contact

- Last updated on GMT

Final straw: some energy companies are refusing to supply pubs with power claiming hospitality businesses are too “risky” (Credit: Getty/J J D)
Final straw: some energy companies are refusing to supply pubs with power claiming hospitality businesses are too “risky” (Credit: Getty/J J D)

Related tags: Energy costs, Finance, Coronavirus

Some energy companies are refusing to supply pubs with power, claiming hospitality businesses are too “risky” for safe contracts, operators have claimed.

The news emerged after Laura Christie, co-owner of Oklava in Shoreditch, London, claimed she was told by electricity supplier SSE that companies were now being more stringent with credit checks, in particular with hospitality businesses, as the sector was deemed “risky” following the Coronavirus ​pandemic.

Christie said she was then told her business was not eligible for a contract unless a deposit of £11,000 was paid to SSE, leaving Oklava operating out of contract since September 2021.

She said: “With VAT going back to 20%, National Insurance increasing, and the cost-of-living squeeze​ rammed in our faces every single day in the news at the moment, the concern [is] about how much consumers are going to want to spend and how much can you pass on before you're just putting people off.

Final straw 

“Omicron [lost us] £50,000 and we got a grant of £4,000, what are we supposed to do with that? I think for a lot of people, it's just the final straw.”

Oklava is not the only bar to face refusal. Helen Cradock of the Feathers Inn, in Stocksfield, Northumberland, said she was turned down by a company called Valda after attempting to switch from EDF when her prices increased from 15p a unit to 38p.

She said the contract was rejected by Valda, which claimed pubs were too high risk.

Following the increase in unit price, the Feathers Inn electricity bill is expected to be £20,000 higher than last year, with other suppliers having quoted upwards of 80p a unit for the pub, according to Cradock.

Crazy prices 

She said: “At the moment, the only companies offering contracts [at] any kind of sensible [cost] is Valda and EDF. [Valda] is the cheapest, but they won't let you get a contract.

“The other providers have sort of panicked a little bit and just gone crazy with the prices. You can't pay 80p a unit rate, I might as well close the doors now.”

This comes after the Morning Advertiser last week reported how one operator saw his electricity bill quote rise by 250%​. 

Operators have called for a cap on energy prices and more Government support to ensure fairer prices and the sectors recovery.

Christie said: “Anytime we've had the opportunity to get back on our feet, it's been knocked down again ​fairly quickly.

“There needs to be a cap [on energy prices] and there needs to be more Government intervention, we're not far enough into recovery to be able to absorb this.”

Valda were contacted for comment but had not responded at the time of publication.

A spokesman for SSE Energy Solutions said: “We have continued to supply Oklava with power throughout this period.

"Any customer that wants to enrol on a fixed-term contract with us is subject to a series of credit and debt checks as is customary for any responsible energy supplier.

"Some customers in arrears and/or with a particularly low credit-rating will be required to pay a deposit in order to obtain a fixed-term contract.

“We acknowledge that the hospitality sector has been through a particularly challenging couple of years and have worked with all of our customers where reasonable to extend payment terms and arrange new payment plans."

Related topics: Legislation

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