Business energy price crisis – what is happening and why?

Anyone who's watched the news in the past 6-12 months will know that wholesale energy prices are rising at a phenomenal pace. Supply chain issues are causing gas shortages and small energy suppliers are going bust, causing a crisis in the UK’s energy market.

Rising energy bills are a particular issue for small businesses, who often get less than ideal energy deals than bigger companies. Small businesses are seeing increasing energy bills as a barrier to growth, with more than 50% of businesses seeing their annual spend increasing by £3000.

The lack of a long-term price cap on business energy means that suppliers can increase their out of contract rates by as much as they deem necessary to cover their increased costs once the cap expires. This has seen out of contract rates rise by an average of 100% since August 2021

This means any business that lets a fixed rate deal expire without arranging a new one could see huge price hikes even though they're using no more energy than before.

The only way to protect against these rate rises is to switch to a new business energy deal. This is an issue that will affect all businesses, including small corner shops, garages and salons. Every business needs energy to keep running, and business owners can only set aside a certain amount of money to cover these costs, regardless of how much they're using each month. A 100% increase on the cost of energy could close a small business.