Industrial estate firms hit by 400% energy price hike

Workers and company owners came together to protest against the increase in electricity bills

More than 50 companies on a single industrial estate are challenging their landlord after their electricity bills shot up by 400%.

All the small firms saw their price for electricity rise from 18p a unit to 78p, which their local MP described as "a terrible contract".

The companies are unable to find better deals because their energy is supplied by the company that owns the estate.

Mercia Real Estate insisted it had achieved "the best value" for tenants.

Across the UK small firms have been struggling with energy bills following the big global increase in the cost of power during 2022.

But the problems of those on industrial estates have gone largely unnoticed.

They are particularly powerless because they cannot negotiate their own energy contracts, but must rely on their landlord to do so.

Phil and Linda Thorne have been charged £60,000 for six months' electricity compared to their previous £10,000 bill

Phil and Linda Thorne's electricity bill has risen by £50,000 for six months' supply.

The couple run a small successful company, called Custom Moulded Polyurethane which makes bespoke products such as special rollers for lifeboats; heat-proof grips for ladders used by firefighters; and hi-tech drill protectors for the oil industry.

Their sophisticated ovens use a lot of power but the day I visited, they were all off.

"We've cut production to three days a week," Phil said.

"It's the only thing we can do to cut our electricity use, but it's hurting the business."

'It's crazy'

Their electricity bills used to be about £1,600 a month and at the end of 2022 they knew the energy contract was up for renewal.

Mr Thorne knew prices had risen around the world.

"We expected it to double but it's actually gone up by 426%," he said.

In April, without warning, their firm received a bill for £9,500 for January's usage and the same followed for February and March.

By July, his bill will be about £60,000 instead of £10,000.

He said: "We're a small business and we just can't pass it on. It's crazy."

What's behind price hike?

The electricity contract at Lydney Industrial Estate is negotiated by the landlord, Aquarius Real Estate which is owned, in turn, by Mercia Real Estate (MRE).

In December MRE agreed a new energy contract, raising the price of electricity from 18p/kWh to 78p/kWh, covering the first six months of 2023.

"I thought it was a joke at first," said specialist carpenter Roger Vane

Every business on the estate received the same bills and the same price hikes.

Simpsons, a motorsports repair garage saw its bill jump from £800 to £2,500.

"Astronomical, ridiculous" said the owner, Julian Simpson-Smith.

A couple who publish coffee-table books featuring old photos of local railways, saw their bill rise from £125 per month to more than £1,100.

In the Harbour Café, they have stopped baking home-made cakes to cut energy use.

But to pass the true cost of their bills on to customers, they would have to charge £12 for a bacon butty, the owner said.

"That's just nuts", co-owner Trudy said.

The Harbour café has had to cut its menu to save energy after the huge bill

When I contacted the landlords, Mercia Real Estate, they told me they had done the best they could.

Or, in their words: "The current contract was identified as it offered the best overall value."

The company stated that for two years firms on the industrial estate had benefitted from a good price for electricity.

'Best value'

Under a fixed contract, the companies were paying 18p/kWh.

At that time, MRE claimed, the average wholesale price for electricity was more than 36p/kWh, making the price for end users higher still.

When the fixed contract ended in December, the property firm decided to sign a new contract for a short period, as they expected energy prices to fall later in 2023. That is why the new price was relatively high, at 78p/kWh.

But it insisted the companies would see the benefit of the contract in July.

In a statement MRE said: "With renewal options for July being received for 50% of the current pricing we believe that the strategy employed has and will continue to deliver below the market average for the period."

Companies on the estate are still unhappy, but they have very little say over their energy deal.

"It's a disgrace", say publishers Phil and Heather Parkhouse

They can challenge the landlord's contract, but it is hard to get them to change it.

At Lydney Industrial Estate, they are working collectively to dispute the bills.

"I thought it was a joke at first", carpenter Roger Vane told me.

In a shed piled high with hardback books filled with photos of old railways, Phil Parkhouse runs Lightmoor Press with his wife Heather.

He said: "The bill just says 'Electricity: £1,100'.

"It doesn't say how many units that's for, what price we're being charged per unit. It's a disgrace quite honestly."

'Terrible contract'

They wrote to their MP, Mark Harper, who sits in the Cabinet as the Transport Secretary.

Mr Harper in turn wrote to the Chief Executive of Mercia Real Estate, Samuel Clarke.

Mr Harper said he was concerned that Mercia's energy broker, Ginger Energy, "have negotiated a terrible contract with Ecotricity".

His letter continued: "The data I have seen suggests that non-domestic customers can expect to pay anything between 36p/kWh as a large business and 45p/kWh as a micro business. I do not accept the assertions that 78p/kwh is the best deal that Aquarius could agree."

Mercia Real Estate has apologised to the companies on the estate for their communication. The first their tenants knew about the new deal was in April, three months after it had started.

But the company insists it has struck the best deal it could for tenants.

A spokesperson for MRE said: "The combination of the previous contract, short term contract and the upcoming renewal will be delivering value for money for consumers, over what has been an extremely challenging period for both energy suppliers and consumers alike."

Energy experts agree electricity prices are likely to fall from July, but for the dozens of small firms on Lydney Industrial Estate, a price drop cannot come soon enough.