Energy crisis: restaurants refused contracts and hit with bills hike

Hospitality businesses are still being refused energy contracts and face huge rises in their bills despite promised government support.

Ministers launched the six-month Energy Bill Relief Scheme in October to cap wholesale costs for gas and electricity, but it has not been confirmed whether support will continue beyond next April.

Operators told The Caterer they were still being hit with extra charges and that it was unclear how discounts would be applied to their bills, making it impossible for them to budget for next year.

Maurice Abboudi, executive director at K10, which has four sushi restaurants in the city of London, said he was paying “at least £45,000” more for energy compared to last year.

“It’s very difficult to understand exactly what benefits we’re getting from the government,” he said. “We haven’t seen our first bill come through with the ‘price cap’ but the issue is there’s no transparency. I’m not sure what my exact bill is going to be and I’m not sure how the discount works.”

Abboudi said K10 was refused credit by an energy supplier for a new restaurant, despite being an existing customer, and was also paying thousands of pounds more a year in standing charges.

Supply issues

In Yorkshire, the Michelin-starred Angel at Hetton restaurant with rooms has struggled to secure an electricity supply for five additional bedrooms that it plans to develop next year.

Johanna Wignall, who runs the Angel with her chef husband Michael, said the business had been turned down for a new connection by their existing supplier Eon despite being a long-standing customer.

“They said because we’re a hospitality business we’re classed as high risk,” said Johanna. “This is despite the fact we already have three separate contracts with them and always pay on time in full by direct debit.

“I’ve tried a few different firms and am getting the same response from all of them. I’m about to have new bedrooms come into our stock and no electricity connection.”

The refurbishment of the new bedrooms was due to start in January, but plans may have to be delayed unless the restaurant can find an electricity supplier.

The Angel has already seen a 270% increase in its energy bills this year despite investing in equipment to make its kitchen more economical.

“I don’t understand how any businesses are supposed to survive that kind of jump,” Johanna said.

“It just baffles me. I haven’t seen any support from the government. There’s supposed to be this business support package, but I haven’t seen anything come through.

“It scares me because there will be people who have a smaller operation than us that are having the same problem. How’s anyone going to survive it? Help has to come otherwise it’s going to be catastrophic [for hospitality]. Everyone’s been affected by the pandemic and now this, you feel like you’re about to get back on your feet and something else comes along.”

Last month industry watchdog Ofgem wrote to energy suppliers warning they “should not profit” from the energy crisis in a way that “negatively impacts customers”.

It said it was considering introducing additional regulations to protect non-domestic customers.

An Ofgem spokesperson said: “Ofgem’s priority is to protect consumers and ensure they pay a fair price for their energy. We are aware that some businesses are having problems in getting fixed rate energy deals and also that some are being asked to pay large deposits by some suppliers.

“We are working with government and stakeholders to determine if further action or assistance is needed to help businesses.”

A government spokesperson said: “We know this is a difficult time for hospitality businesses and we remain firmly on their side. That is why we have acted to deliver the Energy Bill Relief Scheme which means they will pay less than half the predicted wholesale cost of energy this winter.

“The government is working with Ofgem to understand the scale of issues such as the charging of large security deposits and other costs, and we encourage businesses to contact us with evidence of this to aid our investigations.”

Eon did not respond to The Caterer’s request for comment.