Struggling Hospitality Sector accuses Energy Suppliers of imposing price hikes and unfair deposits

What’s happening?

The Covid-19 lockdown and restrictions have battered the hospitality sector making it, along with the retail sector, one of the hardest-hit areas of the UK economy.

Many hotels have been forced to close and pubs and restaurants are facing huge insecurity as restrictions cost them business.

With fears of another national lockdown being imposed over the winter months as infections continue to rise, many in the sector are calling for the government to provide more support and to look into what they deem are ‘shady’ practices from energy suppliers.

Businesses operating in the hospitality have been labelled as high risk by many energy suppliers who are reluctant to take them on. Fears over bad debt are already high and several suppliers are struggling due to more and more customers being unable to pay their energy bills.

Some businesses in the hospitality sector are now reporting that energy suppliers are imposing huge price hikes and that some are outright refusing to offer them quotes for a deal or switch.

Also read: Energy Price Forecast 2020 – The impacts of Coronavirus

‘Not a level playing field’

The organisation that oversees the sector, UK Hospitality has called on Ofgem to investigate energy suppliers who are deliberately hitting businesses in the sector with higher tariffs and hiking prices.

One Scottish hotel reported that they were quoted a 27.3% increase for a year’s renewal from SSE whilst the likes of EDF, EON and Haven Power refused to even provide a quote.

“What the electricity companies are doing is a double whammy, you are getting hit twice, because of Covid-19 and the sort of trade you are in. It’s not a level playing field, you are being hammered because they don’t trust someone else in the same industry,” complained one restaurant owner.

Damaging to the energy sectors reputation

Chief executive of UK Hospitality, Kate Nicholls has said that she’s written to energy minister Kwasi Kwarteng demanding an investigation be made into the behaviour of energy suppliers who committing ‘truly shocking’ practices highlighting one case where a single hotel was told it would have to pay a deposit of £60,000.

“In further examples, we have been told of energy companies penalising hospitality businesses for unused energy during the lockdown period. This lack of empathy with businesses that have been savaged by the coronavirus crisis verges on immoral but there seems no recourse that can be taken,” said Mrs Nicholls.

The energy supply sector’s reputation is often on shaky ground at best but actions such as these being highlighted by an industry struggling at a time of crisis will do nothing but increase the distrust many consumers have.

Energy suppliers of course have the right to defend their interests and there are genuine concerns over mounting bad debt amongst consumers. No sector is getting through the pandemic unscathed but deploying such tactics as tariff hikes and demanding huge deposits from riskier businesses isn’t the way to go.

Ofgem has recognised that energy suppliers have been impacted financially and are aware that some are taking steps to alter their policies towards the renewal and taking on of new customers. It recently announced a wealth of support to suppliers and to small businesses designed to make complaints procedures smoother and protect SMEs from unscrupulous energy brokers.

“Ofgem recently unveiled measures to help millions of micro businesses get a fairer energy deal. The package of support would help tackle unscrupulous brokers, strengthen dispute resolution, and deliver smoother switching. Fairer energy bills are more important than ever as businesses recover from the impact of Covid-19. Suppliers should treat customers fairly to support them in managing their energy needs,” said an Ofgem spokesman.

Also read: New rules planned for Energy Suppliers as Ofgem vows to protect small businesses from unscrupulous Energy Brokers

The government has promised to provide more support to the hospitality sector and recently announced that the 5% reduced VAT rate will be extended in an attempt to ease the pain the sector is facing. 

Further Reading

How should an energy supplier handle energy billing complaints?

Covid-19 fallout likely to see consumers needing government help to pay their energy bills this winter warns Ovo Energy chief

Ofgem could issue final orders to seven energy suppliers over late Renewables Obligations Payments

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