UK businesses were warned yesterday that they could soon see their energy bills rocket by up to five times the current cost.
This nightmare situation – which could lead to widespread closures of companies and massive job losses - is said to be due to a variety of factors, including reduced Russian gas supply and tight electricity markets in Europe.
Cornwall Insight, which provides energy market intelligence and analysis, stated that the crunch will come in October - the traditional month for negotiating new fixed price contracts in the business electricity and gas supply markets.
Firms who negotiated two-year fixed-price contracts in 2020 are potentially facing a fivefold rise, while those renewing an annual contract due to see bills twice what they paid previously.
There are fears higher energy costs could force the closure of many companies across a variety of business sectors, with job losses reverberating throughout the economy.
Cornwall commented: "While the business energy markets have so far managed to cope with the price increases already experienced, it is feared that October's increase in bills, coupled with the other economic concerns being seen in the market, could tip businesses over the edge.
"This is particularly true for certain firms whose profitability is most exposed to energy-cost increases - including hospitality, leisure, retail and many in the industrial sector. Some of these sectors are concentrated in regions that have been positioned in the UK Government's levelling-up agenda, which could damage any efforts to boost productivity and raise living standards in these areas.
Signposts
"Suppliers' reluctance to take on new customers and the struggles of brokers and intermediaries to secure the quantities of quotes for their clients that they have been used to are signposts of where the business energy sector could be heading."
Robert Buckley, head of relationship development at Cornwall Insight, explained that business energy prices have climbed considerably in the past 15 months, and they stand on the verge of another significant steep uplift in October.
He added: "Logic dictates that there can only be so long that so many businesses can pay so much more for their energy without knock-on consequences for themselves, their suppliers, and the wider economy - and if we at Cornwall Insight are correct there will be no return to 2020-21 wholesale prices before 2030.
"Despite this, in contrast to (the impact of soaring energy costs on) households, there has been strikingly little said about the affordability of business energy bills.
"We must think much harder about what this energy crisis is doing to business. This is not only to ensure we don't see loss of output, but so we don't see companies with heritage, roots in their communities and otherwise good prospects washed away.
"Such an outcome would have consequential impacts on real people and families - not just company balance sheets and GDP statistics. Yet the level of action by Government is surprisingly small given their wider economic agenda could be at stake.
"We are simply not having the essential conversations in Great Britain. We must ask ourselves whether we should be following the example of countries such as Germany, who are talking about the potential for rationing energy and taking energy-savings measures now. But what else can be done? Opening a scheme where businesses could get paid to not use energy at peak times would be a start.”
Call from International Monetary Fund
In other energy news, the International Monetary Fund says that governments around the world should allow heating bills to soar to encourage energy conservation and accelerate the push to net-zero carbon emissions.
And UN Secretary General Antonio Guterres wants oil and gas companies around the planet to face special taxes after the war in Ukraine led to a big jump in prices - and much-higher profits for energy producers.
He said: "I urge all governments to tax these excessive profits, and use the funds to support the most vulnerable people through these difficult times."
The UK Government recently brought in a windfall tax on North Sea producers to fund support for families.