Industrial energy users split on price cap

Will Green is news editor of Supply Management
8 October 2021

Business secretary Kwasi Kwarteng has met with industrial energy users to respond to calls for a price cap on company energy bills.

On Friday (8 October) Kwarteng met with the the Energy Intensive Users Group (EIUG), representing firms in the steel, chemicals, ceramics, paper, and glass sectors, after it called for a “winter cost containment measure”.

Andrew Large, EIUG chair and director general of the Confederation of Paper Industries, told BBC Radio 4: “There is currently no cap on business energy costs and one of the things that we're calling for is a temporary winter cost containment measure to try and put a lid on those costs so that these very important industries for the British society are going to be able to continue to operate.”

A spokesperson for the Department of Business, Energy and Industrial Strategy said: “We recognise the recent increase in wholesale global gas prices will be a cause of concern for consumers, businesses, and energy suppliers across the UK.

“The business secretary will be meeting with representative of energy intensive industries today and has also been in regular contact with Ofgem, the energy regulator, and leading and smaller energy suppliers to understand the challenges they currently face and to explore ways to ensure we best protect consumers.

“Our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to further reduce our reliance on fossil fuels.” 

However, the Major Energy Users Council (MEUC) said a survey of members, which includes purchasing organisations, food retailers and cement manufacturers, found most were unconcerned by the recent spike in gas prices.

Eddie Proffitt, technical director at MEUC, told Supply Management: “We found that a significant number were well covered. They had bought a significant proportion of their volume on the year-ahead market.”

Proffit did not support a price cap for industry. “You can’t cap. You have got to have either a proper floating market or you end up with what they have in parts of Europe where in effect [the energy sector] is nationalised.

“We as a country have gone down the competitive market route which has served us well for the last 20 years.”

But he added: “One of the things we are lacking in this country is storage.”

Proffitt called for government action to reduce the taxes and levies companies pay on energy bills, which prior to the latest jump in prices made up 40% of an electricity bill.

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