Energy companies refuse to supply UK small businesses for fear of bankruptcy | Energy industry

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Big energy firms are refusing to supply smaller businesses for fear they could go bankrupt, while some are demanding £10,000 up front, business owners and industry experts have told the Guardian.

In the latest sign of the worsening energy crisis, business owners said they were struggling to find a supplier ahead of the busy October period for renewing gas and electricity contracts. electricity, leaving them with “exorbitant” bills or bail requests.

Suppliers cited as either refusing service or asking for a down payment include SSE, Scottish Power, E.On Next, Drax and Ecotricity.

Business owners have called on the government for urgent action, warning that sectors such as hospitality, which are already struggling with inflation and the lingering effects of the Covid-19 pandemic, are particularly at risk.

Teresa Hodgson, owner of the Green Man pub in Denham, near Uxbridge, was initially told by her SSE supplier that they could not give her a quote for energy as prices were rising so rapidly.

“When I identified them they said before we could go any further we want a £10,000 deposit,” Hodgson said.

“When I asked why, because they’ve never had a problem with me, they said, ‘We don’t think many pubs are going to be successful this year and we need some security.'”

“There were other vendors who just wouldn’t entertain him because it’s hospitality,” she added.

Unlike households, businesses typically buy energy under contracts that last for several years, often through a specialist broker who puts them in touch with suppliers for a quote.

If they can’t find a fixed-rate contract, they switch to a “deemed” off-contract rate, which is not capped and can shoot up depending on market prices.

Mark Dickinson, managing director of energy broker Inspired, said some energy companies choose only to renew contracts with customers they already have, “so they are pulling out of new business. [Others are] saying they don’t even want to renew current customers. »

He said this was partly due to soaring prices in wholesale energy markets, caused by the war in Ukraine, which made it harder for suppliers to price long-term contracts. Where they do flat-rate contracts, bills have increased six-fold, in some cases.

Energy companies have also struggled to convince credit insurers to provide cover in the event of customer bankruptcy, amid reluctance to insure sectors under pressure, such as pubs.

Instead, vendors manage their risk by asking for upfront bond payments, even from existing customers.

The British Beer and Pub Association (BBPA) said one of its members had recently been turned away by five suppliers, a trend that threatens the survival of pubs.

“With many energy suppliers now refusing to supply contracts to pubs, they are at even greater risk as a lack of competition in the market force them to accept exorbitant contracts or remain in punitive off-contract tariffs,” said said Emma McClarkin, the chief executive of the BBPA.

“The market is failing in the hospitality sector, and we need a cap in energy prices before this crisis forces pubs and other businesses across the country to close.”

Gemma Holt, the owner of beauty salon Lily in Whitchurch, Shropshire, said it was almost impossible for her to renew her energy contract.

“We thought we had found a new energy supplier, but the first one we tried didn’t take us because we are a hair and beauty company, and because of the energy consumption, with the machine wash and the dryer running all the time.”

William Robinson, whose business Robinsons Brewery owns more than 200 pub tenants, called for urgent action.

“If the government doesn’t address this issue, the ripple effect could be huge,” he said. “The fact that they take the summer does not help us. The main thing is that it happens quickly, we cannot have a period of paralysis.

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A spokesperson for E.ON said: “Like many other commercial energy suppliers, at certain very volatile times we have had to suspend the offer of contracts to new customers so that we can focus on the supporting existing customers during this challenging time while monitoring and responding to market risks. .”

A ScottishPower spokesperson said: “We continue to offer energy supply contracts directly to new and existing small business customers, and existing customers can also renew their contracts through their energy broker if they have appointed one. a.”

Scottish Power and Ecotricity have both said companies must pass a credit check.

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