‘My energy firm’s fee has risen from 29p to £4 a day’ – BBC News

  • by Michael Race
  • Business reporter, BBC News

image Source, Blue Ball Inn

image Caption,

Emma (right) runs the Blue Ball Tavern with her husband Karl and her staff

Emma Shepherd is one of many pub landlords searching for the best energy deal as her costs continue to rise.

But each quote includes an increase in his standing charge – the fixed daily fee for suppliers – with one it will rise from 29p to £4 a day.

UK Hospitality said restaurants, pubs and bars were being hit with a 600% increase in standing charges with “absolutely no justification or explanation”.

But the trade body for energy firms said the tariffs were high due to cost.

Energy regulator Ofgem told the BBC it had “information” that some businesses were being asked to pay additional costs. It said it was looking into whether action was needed.

Mrs Shepherd, 52, who runs the Blue Ball Inn near Sheffield, said “no one” could tell her why her standings charge had skyrocketed. She said the pub had already closed its kitchens on Mondays and Tuesdays to reduce running costs.

The British Beer and Pub Association said its members had reported costs of “layered on bills”. It added that the additional cost involves a larger deposit amount.

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Unlike homes, businesses are not covered by an energy price cap, which limits the amount that suppliers can charge per unit of energy.

Wholesale electricity and gas prices have been fixed for pubs and many other businesses from October under government support, to protect companies from rising energy costs.

But the standing charge element of the bill, which is the daily amount customers pay for the supply of energy, regardless of the amount used, does not come under support.

There is a preparation to reduce the current level of help from April. But wholesale gas prices, which suppliers pay to gas companies, have also fallen in recent months from last year’s record highs.

Mrs Shepherd, who entered the pub business with her husband Karl in 2019, has managed to stay afloat during the Covid lockdown, restrictions and energy crisis because she had a fixed gas and electricity deal.

But when she wanted to renew, she said her current provider offered her a convertible contract with a fixed fee of £4 a day, when it used to be 29p.

The per unit cost of energy is also reported to be around 37 paise per day, which is more than 15 paise.

Mrs Shepherd said the pub would be demanding bills of up to £17,000 a year, which would be between £8,000 and £10,000, if they took the deal.

“I’m playing a game of poker with the energy companies,” she told the BBC. “My electric and my gas cost more than my rent which is insane. I’m working hard to earn so little.”

Although Mrs Shepherd may have been able to get a fixed rate at a lower cost than a variable rate, she said being locked into a deal at a higher cost for years when energy prices were projected to come down He had to make a difficult decision.

Chris Jowsey, boss of Admiral Taverns, which owns 1,600 pubs, called on energy firms to bear in mind “to make sure they are not profiteering”.

He warned that “draconian” energy contracts have put many pubs at risk of closure.

Energy UK, the trade body for suppliers, said it was “a misconception that perpetual charges are being increased to cap unit prices”.

A spokesman said one reason for the rise in standing charges was that the cost of transmitting and distributing energy connected to the wider network had increased.

He added that another reason for the higher network fee was due to costs incurred as a result of suppliers failing, which many, mostly smaller firms incurred when wholesale prices were increased.

Last summer, energy watchdog Ofgem was accused by the National Audit Office of allowing a market to develop that was vulnerable to major shocks.

While Ofgem acknowledged some failings, it said it was dealing with “a once-in-a-generation global energy price shock”.


In a letter to Energy Secretary Grant Shapps, hospitality industry leaders called on the government to instruct the energy regulator, Ofgem, to block energy contracts signed when prices were higher last year due to lower wholesale prices.

Ms Nicholls said half of businesses in the region were locked in high-priced deals and warned thousands may not be able to pay bills if support is eased from April.

Ofgem told the BBC it was “aware” that some businesses were having trouble securing fixed-rate energy deals and were being asked to pay additional costs.

It said its priority was to ensure customers paid a fair price for energy and said it was looking into whether action was needed.

The government said Ofgem’s review would include whether the regulator needed more powers.

It said the energy support for businesses meant they were paying almost half of their estimated wholesale energy costs this winter.

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