UKHospitality calls for urgent Ofgem intervention

In a letter to Grant Shapps MP, Secretary of State for Energy Security and Net Zero, the trade body has called on the regulator to intervene in the non-domestic energy market as businesses struggle with extortionate costs and a looming reduction in Government support from 1 April​​.

If the Government is unable to take suppliers to task for 'unscrupulous behaviour towards hospitality', it has asked for a three-month extension to the energy bill relief scheme for sectors recognised as energy-intensive and therefore vulnerable.

Nearly half of businesses in the sector (48%) are contending with energy bills fixed at record high prices during the energy crisis between July and December 2022, according to UKHospitality.

The trade body has urged the Government to instruct Ofgem to enforce the renegotiation of contracts signed during this period, penalty-free, with the support of deposits already taken.

It is also calling for the energy regulator to enact full regulation of the non-domestic energy market if suppliers are unwilling to act; reset security deposits to reflect falling prices and increase business liquidity; and introduce a Government-backed trade credit insurance scheme for sectors that suppliers perceive as high-risk.

In the letter, UKHospitality CEO Kate Nicholls said: “Half the businesses in our sector will be locked into extortionate prices as energy support is significantly reduced from April. This could have a potentially terminal impact on thousands of businesses that are simply unable to afford their bills.

“We appreciate that Government has had to take tough decisions to stabilise the nation’s finances, and that is why the onus has been put on OFGEM. We welcomed this direction but have concerns about the extent of OFGEM’s powers and their ability to act at the pace necessary to provide the support businesses require.

“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.”