Hospitality businesses have raised the alarm that energy suppliers are quoting prices significantly above the wholesale price, signalling a disconnect from previous pricing models and undermining the Government’s Energy Bill Relief Scheme.
The margin between wholesale and retail energy prices has soared over the last six months, despite Government’s intervention in the market. Typically, the retail price would be slightly above the wholesale price. That is no longer the case with hospitality businesses now reporting a significant difference between the two, with no rational explanation offered to justify the increase.
UKHospitality chief executive Kate Nicholls has written to business secretary Grant Shapps urging him to instigate an investigation by Ofgem and the Competition and Markets Authority (CMA) into energy pricing for commercial businesses. Any investigation needs to be rapid, reporting before Christmas, and would ensure the energy market is operating competitively and that Government is getting value for money from its support package, she says.
Kate adds: “The hospitality sector is extremely vulnerable to energy price fluctuations and have been badly affected by the ongoing energy crisis. The soaring costs are hitting businesses that have not fully recovered from the pandemic, may be carrying substantial debt as a result, and are facing a downturn in consumer spend due to the cost-of-living crisis.
“The Government’s support package for business is absolutely vital but there are real fears that this substantial package of support is being undermined by energy suppliers quoting far above the wholesale price, with no transparency as to why. Many businesses are still not being offered fixed rates at all despite the certainty provided to suppliers by the Government.
“There need to be complete clarity and certainty that energy suppliers are not deliberately profiteering from the current crisis and the size of the Government’s intervention. That is why I’ve urged the Business Secretary to recommend Ofgem and the CMA urgently investigate.
“I believe it is in the interests of business, the taxpayer and the Government itself to be completely assured that its support package is being delivered in the fair way it intended and not used for commercial gain at a time of national difficulty.”