UKHospitality calls for ‘urgent’ Ofgem intervention

UKHospitality is urging energy regulator Ofgem to intervene in the non-domestic energy market as businesses struggle with costs and a looming reduction in government support.

In a letter to Grant Shapps, the secretary of state for energy, security and net zero, the trade body has called on the regulator to address suppliers’ “unscrupulous behaviour” towards hospitality.

If the government is unable to do so, UKHospitality added, there should be a three-month extension to the Energy Bill Relief Scheme for sectors recognised as energy intensive, and therefore vulnerable, and that hospitality should be among them.

It said that 48% of businesses in the sector were contending with energy bills fixed at record high prices during the height of the energy crisis between July and December last year, which could be “terminal” for businesses once government support significantly diminishes from April.

UKHospitality has urged 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.
• 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 wrote: “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.”

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