Energy price cap: Welsh firms want soaring bills protection

Welsh businesses are braced for steep energy price rises

Welsh businesses say they need price caps to protect them from soaring energy costs.

Gas prices have risen 70% since August alone, with bills surging for firms who haven't entered fixed-price contracts.

Companies with existing energy deals say they are braced for large increases when they expire.

The UK government said it was "determined" to secure a competitive future for energy-intensive industries.

Roger Phillips, commercial manager at Steel 4 Structures in Buckley, Flintshire, outlined the impact energy costs were having on the firm.

"In May our electricity price was £2,800," he said.

"Currently we are having to pay £3,600 for our electricity. Going forward, from the quotes that we have had for electricity, they have gone up to 21p per kilowatt, which will mean it costs £4,200.

"That is a significant and concerning increase for this business

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Mr Phillips said businesses required UK government support, and asked for measures including energy price caps for industry.

He said: "We would like to see the government incentivise the renewable energy industry, and also to provide capping on the price of electricity for industrial customers.

"And also to provide the loans that they are suggesting for the major manufacturers such as the steel suppliers, to keep those steel mills open, and not having to close."

Gas shortages have been reported in the UK and other countries.

A cold winter in Europe has drawn on more gas than usual, leaving stocks lower.

Energy expert Dr Carol Bell expects months of problems

Energy markets expert Dr Carol Bell believes current price spikes could last into the winter.

She said: "Economies have opened up after Covid and demand has bounced back, not only in Europe and America but also in the Far East.

"That has driven up prices and they have been exacerbated because storage facilities in Europe had been at a relatively low level because last winter was such a cold one.

"Production from Russia has also been down a bit, and therefore those storage facilities haven't been filled up over the summer.

"So we are going into the winter without adequate storage behind us, and if things get much colder, and unless new supply comes on board, we are in this for a few months."

Pontypool-based ProSteel Engineering expects its electricity bill to climb by a third when its current deal expires.

Its welders are currently building new pedestrian bridges to span the tracks at Newport railway station.

The company relies heavily on electricity to power its machinery and managing director, Richard Selby, expected a significant rise in prices next spring.

"From April next year we anticipate it will add about a third on to our electricity prices," he said.

"Obviously it is a significant monthly increase to the business and something that we can't ignore."

ProSteel Engineering managing director Richard Selby is braced for a "significant" rise in costs

Mr Selby wanted to be able to source electricity from green supplies.

"What we really want from the Welsh government is to talk to the private sector, to work with industry to facilitate renewable electricity supply in Wales," he said.

Swansea low-alcohol beer maker Drop Bear Beer uses a brewer whose gas contract has just ended and was braced for a hike in brewing costs because of the energy price rises.

"Do we pass that on to customers who are already struggling after the pandemic, or do we absorb that ourselves? Our hand is kind of being forced," said director Joelle Drummond.

Beer maker Drop Bear Beer faces the dilemma of whether to raise retail prices

The company has seen sales boom, but the need to boost production means it faces even greater costs thanks gas prices.

Ms Drummond believed "100%" that business customers should be protected by a price cap.

"We need government support and we need it now," she said. "I think it is good that the government are looking at potentially putting a package together but we really needed that yesterday."

The UK government said it was "determined to secure a competitive future" for energy intensive industries across the UK.

A spokesman said: "We have provided £2 billion in recent years to help with the costs of energy and to help protect jobs.

"Ministers and officials continue to engage constructively with industry to further understand and to help mitigate the impacts of high global gas prices."

The UK said some European countries had lower industrial electricity prices partly because some costs were recovered from customer bills.

The spokesman added: "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."

The Welsh government said high prices were a symptom of an over-reliance on imported fossil fuels.

A spokesman said: "We need to move towards a renewable, localised and flexible energy system.

"Not only will this create clean electricity, it will also open up opportunities for Welsh supply chains and local employment, while protecting against future global price hikes."