Energy bills: Hotels stuck in pricey contracts as costs fall

Hotel bosses have accused energy firms of failing to pass on lower prices, warning businesses could be at risk.

Hotel boss Glenn Evans from Betws-y-Coed, Conwy county, pays 90p a unit on his 12-month contract although prices have fallen to 30p a unit.

Hotel owner Elyse Waddy, in Llandudno, faces paying £200,000 more when her three-year fixed tariff ends in July.

The industry body said energy was bought in advance and changes took time to reach customers.

Energy regulator Ofgem said it had written to suppliers to ask them to "show flexibility" with businesses locked into fixed-price contracts signed when prices were at their peak last year.

Mr Evans, operations director at the Royal Oak Hotel, said the fixed price electricity tariffs offered in October were a "shock to the system".

Bill increases were about 400%, but the out-of-contract rate was even higher, so Mr Evans felt he had to sign up for 12 months as the six-month contracts had "disappeared".

Mr Evans wants UK ministers to order energy suppliers to allow firms locked into fixed peak tariffs from last year to renegotiate their contracts.

He added: "We're looking for the government to recognise that there was a dysfunctional market, and that between them and Ofgem, they allow us access to today's prices."

Mr Evans said having already put up prices and introduced energy saving measures, there was not much more he could do to help pay the bills.

"We need hot water for our guests, we need the fridges on, we need the kitchen ventilation, we just can't cut back on parts of the operation."

Ms Waddy, who owns the Empire Hotel, said her gas bill was going to triple and her electricity would double when her contract ends in July.

She likened her experience to "playing poker" with utility companies that "have the power".

Conservative MP for Aberconwy Robin Millar has launched a campaign in Parliament on the issue along with other MPs and hospitality trade bodies.

He accused energy suppliers of "anti-competitive behaviour".

Energy UK, which represents energy companies, said: "It is important to bear in mind that, when contracts have been agreed and signed, energy is purchased at market rates on behalf of the customer."

Ofgem acknowledged that the costs faced by businesses locked in fixed-term deals were "an enormous challenge".

It added: "While as a regulator, we can't unpick private contracts, we want to see commercially sensible solutions that help non-domestic customers, and we recently wrote to suppliers to ask them to show flexibility, and we will continue to press suppliers on this, while we review the regulation of the non-domestic market more broadly."

The UK government said it had given businesses "unprecedented support" and was in regular discussions with them and Ofgem to ensure customers got a fair deal.