Admiral Taverns’ 1,600 pubs have survived Brexit-induced labor shortages and months of closure during the pandemic. But the struggle is to find an electricity and gas supplier who can turn off the lights of some pubs for good.

The company’s £350,000-a-year energy contract is set to expire this month and suppliers are refusing to provide a quote. If he stays with his existing provider, which he prefers not to, he will have to pay 10 times the price.

“Nobody will get us a long-term contract,” said Chris Jowsey, chief executive, who says most pubs pay for their own energy, which previously accounted for about 5 percent of sales. “We’re going to lose a lot of pubs that we’ve got through Covid due to rising energy bills.”

Admiral isn’t the only one struggling to find a long-term energy contract at a reasonable price. Hotels, restaurants and gyms are all complaining that gas and electricity suppliers are refusing to quote, renew contracts or, when they do, offer steeply high rates, threatening businesses already affected by the pandemic.

Huw Edwards, chief executive of industry group UKActive, said the sharp rises in energy prices meant that large, energy-intensive gyms and leisure centers with swimming pools “were now at high risk of closing”.

The coming weeks are crucial: While the custom contracts with energy suppliers often last two to five years and could expire any time, a large number of deals will expire in April in line with the fiscal year, experts say.

Admiral Taverns CEO Chris Jowsey warns high utility bills will close some pubs © Danny Sleeuwenhoek

In addition, while suppliers are required by law to provide consumers with a “credible” price, the same protections do not apply to businesses. Energy costs will be capped at £2,000 per year for most households from April, but there is no cap on costs for business customers.

The average gas bill for a small London business rose about 258 per cent in the year to February – from £1,345.07 to £4,815.36 – and by 145 per cent for electricity – from £4,724.73 to £11,589.89, according to the Federation of Small Business, which says it will rule out even more extreme price swings this month fueled by the conflict in Ukraine.

Energy UK, the trade body for electricity and gas suppliers, said the pressure on suppliers from rising wholesale gas prices meant they had to make a “commercial decision about whether it is feasible to hire a particular business customer.” “. Thirty suppliers have already exited the market as a result of rising energy prices in recent months.

Michael Kill, chief executive of the Night Time Industries Association, said when suppliers agree to power pubs and restaurants, they often demand upfront security bonds of £10,000 or more in cash.

The spike in energy costs could cause many small businesses to go out of business, he added. “Independents are the ones who suffer because they don’t have easy cash flow for energy deposits.”

David Moore, founder of London restaurant Pied A Terre, said when he was transferred to another supplier after AMPower collapsed in December, he was billed £2,500 for 10 days of power. He used to pay about that amount per month.

He found a new supplier through a broker, but the cost is twice as much, and because of the company’s risk profile, Moore had to sign the deal the day it was offered to secure that price.

Hoteliers have taken to Facebook to complain in private groups that suppliers, including Npower, are refusing to hire small operators.

Npower, Eon’s industrial and commercial supply company, said it was focused on “supporting existing customers with shorter-term deals”.

“Due to unprecedented price volatility and a lack of liquidity, it is currently extremely challenging to offer competitive pricing to new customers,” it added.

Tax collectors are particularly vulnerable to refusing supply contracts, as many live locally.

“Often it is their home, but they are classified as commercial real estate. There is no limit for them to take advantage of them domestically,” said Emma McClarkin, chief executive of the British Beer and Pub Association, before adding: “It could see them out of their house.”

“Cafés already have debt behind them and have missed all that trade” [during the pandemic] and are sunk by massive energy surges,” McClarkin said.

Energy is just a cocktail of rising costs in the hospitality industry: wages have already risen as the industry struggles to recruit staff, the cost of ingredients is soaring and in April the VAT on food and tourism is set to return to its full 20 percent rate after the reduction of the Covid. Business rates are also going up.

To cushion the blow, pubs and restaurants are raising prices but risk losing customers who have only just started returning after Covid.

JD Wetherspoon, one of the UK’s cheapest pub chains, raised its prices last week and Admiral Taverns said it was likely to follow suit. Jowsey of Admiral Taverns said it was a “failure of market regulation” that he could not find an alternative supplier.

But energy regulator Ofgem said his “top priority is consumer protection”. It added that it was closely monitoring the situation, but “companies can generally identify a suitable new deal”.

This article has been amended to make it clear that Admiral Taverns only pays the bills for some of its pubs


This post Rising energy prices threaten last orders for struggling pubs was original published at “https://www.ft.com/content/bf3c02c1-cb06-44b0-815d-6efdb6b4c941”

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