Small businesses facing 250% gas price rise

Research shows that small businesses are facing gas bills that are on average 250% higher than they were last year

Small and medium-sized businesses are facing gas prices that are on average 250 per cent higher than a year ago.

The figures come from energy consultant Cornwall Insight’s Pricing in the SME gas markets quarterly report.

The government may need to intervene or more companies will fail, leading to customers having a higher cost of living as businesses pass on increased costs to them, say analysts at Cornwall Insight.

A lot of the attention, including in the recent Spring Statement, have been on household energy bills. These are mostly covered by the regulated price cap and jumped by 54 per cent to an average of £1,971 a year at the beginning of the month. Cornwall Insight forecasts that domestic bills could rise to £2,600 in October.

However, firms have yet to see any support like households have. With many business’ energy contracts ending in April, some will be forced into an out-of-contract tariff at a higher price. What’s more, energy firms withdrawing tariffs at short notice is making it more difficult to secure the deals that they need. There has been a call for price cap as with domestic energy but experts say that this will do little but defer the problem until later on down the road.  

Craig Lowrey, senior consultant at Cornwall Insight, said: “If the government does not want to see more businesses fail, higher product prices for consumers and resultant economic impacts, it will need to start giving [SME businesses] some attention.”

He added: “There are also opportunities to look at the demand for gas rather than compensating businesses after the fact.

“While many SMEs cannot simply reduce gas use, the current high prices mean those companies with the ability to be flexible in their gas demand due to on-site investments will inevitably look to do so.

“Therefore, there could be an opportunity to give commercial incentives to those willing and able to reduce their gas use at certain times.”

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Anna Jordan

Anna is Senior Reporter, covering topics affecting SMEs such as grant funding, managing employees and the day-to-day running of a business.

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