UKHospitality: Energy suppliers not passing on discounts to hospitality businesses

Some energy suppliers are still not passing on government discounts on bills to struggling restaurants, hotels, and pubs, UKHospitality chief executive Kate Nicholls has told MPs.

She said “quite a few” firms had told customers they were unable to apply relief to energy bills as their systems would not allow them do to so.

It comes after Ofgem this week announced plans to launch a call for evidence to hear about businesses’ experiences in the energy market.

“These are vulnerable businesses that need support right away and the biggest energy suppliers are not passing it through,” Nicholls told the Business, Energy, and Industrial Strategy Committee.

Very few energy suppliers are offering new contracts to hospitality businesses and many are charging a “blanket risk premium” on the sector as a whole, Nicholls said.

This has meant some businesses have seen a 500% - 600% increase on standing charges or were required to pay huge security deposits to obtain a contract.

Nicholls said that though there were some “very good guys” who had kept prices low for businesses there was an “imbalance of power” between single-site independent operators trying to negotiate with large energy firms.

Ofgem said on Monday it would look at where it may need to change regulations and review whether suppliers were complying with existing rules.

The energy watchdog will update Chancellor Jeremy Hunt on its progress before the spring Budget in March but said the “complexity” of the non-domestic market meant its review would continue throughout the year.

“We understand that this is very difficult time for many businesses…it is very important to me that we work with all stakeholders to understand and resolve issues in this market,” Ofgem chief executive Jonathan Brearley said in a letter to Hunt on Monday.

Hospitality businesses expect their bills to rise by 82% when government support is reduced in April, according to a joint survey of UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and Hospitality Ulster members.

Some 42% of respondents said rising energy prices had led them to reduce the number of hours they open per day and 34% had cut the number of days they open each week.

Sacha Lord, Greater Manchester's Night-Time Economy Adviser, has called for an inquiry into why many operators have not received energy bill support they have been entitled to since September 2022.

Image: bezikus / Shutterstock