In the latest sign of a deepening energy crisis, business owners said they were struggling to find a supplier ahead of the busy October period for gas and electricity contract renewals, leaving them facing “extortionate” bills or deposit demands. Suppliers named as having refused the service or demanded an upfront payment include SSE, Scottish Power, E.On Next, Drax and Ecotricity. Business owners have called for urgent government action, warning that sectors such as hospitality, which are already struggling with inflation and the lingering effects of the Covid-19 pandemic, are at particular risk. Teresa Hodgson, owner of the Green Man pub in Denham, near Uxbridge, was initially told by her supplier SSE that he could not give her a quote for energy because prices were rising so quickly. “When I got through they said before we 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 make it this year and we need insurance.’ “There were other suppliers who just wouldn’t entertain it at all because it’s hospitality,” he added. Unlike households, businesses typically buy energy on contracts that last several years, often through a specialist broker who connects them with suppliers for a quote. If they can’t find a fixed-rate contract, they move on to an out-of-contract “predictable” rate, which has no cap and can jump based on market prices. Mark Dickinson, chief executive of Energy Broker Inspired, said some energy companies were only choosing to renew contracts with customers they already had, “so they’re pulling away from new business. [Others are] essentially saying they don’t even want to renew current customers.” He said this was partly due to rising prices in wholesale energy markets, caused by the war in Ukraine, which have made it difficult for suppliers to price long-term contracts. When fixed rate contracts are agreed, bills have gone up sixfold, in some cases. Energy companies have also tried to persuade credit insurers to provide cover in case customers fall through, amid reluctance to insure stressed sectors such as pubs. Instead, suppliers manage risk by asking for bond advances, even from existing customers. The British Beer and Pub Association (BBPA) said one of its members was recently dropped by five suppliers, a trend that threatens the survival of pubs. “With many energy suppliers now refusing to provide contracts to pubs, they are being put at further risk because a lack of competition in the market is forcing them to take on extortionate contracts or remain penalized out of contract,” said Emma McClarkin. managing director of the BBPA. “The market is failing in the hospitality sector and we need a cap on the price of energy before this crisis forces pubs and other businesses across the country to close.” Gemma Holt, the owner of Lily’s beauty salon in Whitchurch, Shropshire, said it was almost impossible to renew her energy contract. “We thought we had found a new energy supplier, but the first one we tried wouldn’t take us because we’re a hair and beauty business and because of the energy consumption, with the washer and 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, the fallout could be huge,” he said. “It doesn’t help that they take the summer. The key is that it happens quickly, we can’t have a period of paralysis.” Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk An E.ON spokesman said: “Like many other business energy suppliers, at some extremely volatile points we have had to stop offering contracts to new customers so we can focus on supporting existing customers through this difficult time, while we monitor and we respond to market risks.” A ScottishPower spokesman said: “We continue to offer energy supply contracts directly to both new and existing small business customers and existing customers can also renew their contracts through their energy broker if they have appointed one.” Scottish Power and Ecotricity said the businesses had to pass a credit check.
