‘National scandal’ warning over energy firms’ practices

By Gary Lloyd

- Last updated on GMT

Warning issued: Sacha Lord says a ‘national scandal is on the horizon’
Warning issued: Sacha Lord says a ‘national scandal is on the horizon’

Related tags Finance Social responsibility Legislation Pubco + head office Multi-site pub operators Tenanted + leased Property

Ofgem has been urged to launch an investigation and back the cancellation of exit fees for sector businesses from onerous energy bills.

Sacha Lord, the night-time economy adviser for Greater Manchester, has issued the demand in a bid to curb the number of small and medium businesses from closure.

The Government introduced the Energy Bill Discount Scheme on 1 April as a replacement for the Energy Bill Relief Scheme for businesses but this entails significantly scaled back fiscal help – a move hospitality industry leaders have predicted will mean the closure of thousands of venues across the UK.

Lord said with the British Beer & Pub Association warning pubs will need to increase turnover by an average of at least 11% to break even, turnover now needs to be 8% higher than before the energy crisis.

National scandal

He believes a “national scandal is on the horizon” with venues that locked in contracts at the peak of the energy crisis last year now being left without Government subsidy in the face of excessive unit costs.

Lord cited Greater Manchester pizzeria Dokes, which has been asked to pay a £32,000 exit fee to terminate its contract with supplier Pozitive Energy. It was paying 17p per unit for electricity when the restaurant was launched but contracts soared last December to 70p per unit, capped at 47p per unit through the Government’s energy cap scheme until it ended on 1 April.

Lord said: “As energy prices soared last year, we saw a host of providers decline to take on new contracts from the hospitality industry. This inevitably led to a black market where businesses were pressured into signing up to energy contracts far beyond their means with unscrupulous providers.”

Unwarranted prices

He continued: “We are now seeing these providers charging unwarranted prices for gas and electricity, and even more concerning are the extortionate exit fees being summoned as business owners now try to renegotiate terms.

“Ofgem was set up to protect consumers and improve the energy system but it is currently doing neither. We urgently require intervention from Ofgem to investigate these providers and provide a realistic pathway for businesses that, without help, will undoubtedly fall into bankruptcy.”

Ofgem has been at the forefront of media scrutiny in recent months, following its failure to care for energy customers, both residential and commercial.

In February, former Prime Minister Gordon Brown accused the regulator’s chief executive Jonathan Brearley of “dismally” failing to protect vulnerable customers after it was revealed that hundreds of thousands of customers were forced to switch to costly prepayment meters, pushing some into the hands of illegal money lenders.

Related topics Legislation

Related news

Show more