UKH calls for urgent OFGEM intervention

07-Mar-2023 - Last updated on 07-Mar-2023 at 11:02 GMT

Gov support: UKH calls for OFGEM intervention (Getty/ semenovp)

UKHospitality (UKH) has urged OFGEM to immediately intervene in the non-domestic energy market as businesses struggle with eyewatering costs and a looming reduction in Government support.

In a letter to energy security and net zero secretary of state Grant Shapps, UKH has reiterated the need for OFGEM to take suppliers to task for their immoral behaviour towards hospitality.

If the Government is unable to do so, the trade body will call for a three-month extension to the energy bill relief scheme for sectors recognised as energy intensive and vulnerable, and that hospitality should be among them.

UKH chief executive Kate Nicholls said half the businesses in hospitality would be locked into extortionate prices after energy support was reduced come April. She believed this could have a potentially terminal impact on thousands of businesses that couldn’t afford their bills.

Almost half of businesses in the sector (48%) are contending with energy bills fixed at record high prices during the height of the energy crisis between July and December last year.

Double whammy

With Government support reduced from April, this represents a devastating double whammy for the sector, according to UKH.

Nicholls continued: “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.

“Without action, we believe the only alternative is to extend the Energy Bill Relief Scheme – either across the economy or for specific sectors – for a further three months.”

Call for help

The trade body 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.

It has also asked Government to enact full regulation of the non-domestic energy market if suppliers are not willing to act and reset security deposits to reflect falling prices and increase business liquidity.

It has also called for the introduction of a Government-backed trade credit insurance scheme for sectors that suppliers perceived to be high-risk.