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Rising energy prices leave businesses feeling the heat

26 August 2011
Rising energy prices leave businesses feeling the heat

Hospitality businesses grappling with spiralling gas and electricity prices have been urged to shop around to ensure they get the best energy deals available and think harder about saving energy.

The past several weeks have seen a number of major energy providers raising their prices, with Npower becoming the latest, lifting domestic gas prices by 15.7%, and electricity by 7.2%. Meanwhile, wholesale gas prices for winter delivery this year are expected to hit 70p per therm, up 30% on last year.

Business operators told Caterer they were now having to look very closely at cost-cutting on energy in order to remain profitable.

Andrew Brown, chef-proprietor of Brown's Cafe & Grill in Darlington, said he had seen his energy bills skyrocket from £333 to over £1200 per month in the last 18 months, an expenditure he can't compensate for by simply raising his prices. "We're now all at the limit of what we can charge our customers," he said.

It has become a case of keeping tabs on the little things. "Air conditioning gets switched off and doors get opened, our wine coolers are turned off at night, and we're canny with the lighting," he noted.

Rupert Elliott, general manager of Bibury Court in Gloucestershire, who has experienced a 50% rise in his energy bills over the last two years, has been making similar changes. In staff houses, meter keys have been installed, while thermostatic detectors are becoming a regular fixture in guest bedrooms. "We turn the temperature down a degree or two and put in time delay switches in non-essential areas," he added.

Meanwhile Alastair Scoular, owner of the Steam Packet Inn on the Isle of Whitorn in south-west Scotland, hopes to make savings by renegotiating his contract on a yearly basis from here on in, but has also tried to combat the rising energy prices by making the switch to low-energy lighting and upgrading one of his ovens to a more efficient model.

With price hikes showing no sign of slowing, it's become a matter of survival, according to Brown. He concluded: "Those of us who are able to survive it will be a lot stronger at the end of it."

top three tips to save energy
The Carbon Trust estimates that it is possible to cut business electricity bills by about 10% without any capital investment. We discover how with British Gas's three top tips on how to cut costs and reduce energy wastage.
1 Ensure you are put on your energy supplier's smart meter installation priority list - smart meters allow businesses to pay accurate bills based on precise readings and help operators understand where they are wasting energy.
2 Organise the kitchen. If the fridge is next to a hot appliance it has to work harder to keep produce at the correct temperature. Making sure it's regularly defrosted also significantly reduces its costs to run.
3 Clean your air-conditioning filters and save 5% on the electricity used.


what should you be paying?
According to Jonathan Elliott, managing director of Make It Cheaper, a utility price comparison website aimed specifically at businesses, operators who ignore their renewal letters are most at risk of paying over the odds.

"If a business fails to shop around, their contract will ‘rollover' on to renewal rates that might see them paying double the best available unit price," he explained.

"We encourage business owners to work out how much of their product or service they would need to sell in order to generate, for example, £1,200 profit. How much easier would it be to switch suppliers and save the same amount?"

We asked Make It Cheaper what energy prices three different-sized hotels in Nottingham could expect to pay in annual energy costs.

### 25-room hotel
Electricity5k day/15k night Annual spend ££4,587
Gas80,000kWh Annual spend £2,640
Total£7,227
### 50-room hotel
Electricity 70k day/30k night Annual spend £9,043
Gas 150,000kWh Annual spend £5,912
Total£14,955
### 100-room hotel
Electricity140k day/60k night Annual spend £17,654
Gas450,000kWh -Annual spend £14,142
Total£31,796
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