None of your business: Suppliers ramp up closures as energy bills crisis bites

Energy providers forced 20 businesses to close over unpaid energy bills in the last four months, according to new data from advisory group Mazars.

This is a 186 per cent spike on the same period last year, when seven were driven to closure by suppliers.

If an energy firm is owed money by a commercial customer, they can use a “winding up petition” to close the business.

This enables them to gain repayment from that business’ liquidated assets.

Energy providers have traditionally been unwilling to forgive any debt owed from customers in arrears, typically replacing customers which have gone insolvent.

There is also a lower threshold for shutting down an indebted business compared to an indebted individual

The minimum debt threshold for registering an insolvency petition against a firm is just £750, compared to £5,000 for individuals

Companies suffer soaring energy costs as contracts come to an end

Many firms have seen their energy costs spiral over the past year as their fixed term contracts for energy ended.

With wholesale costs soaring, suppliers have increased monthly payments by huge amounts, with businesses not having the protection of a price cap like households.

Despite the significant support package recently unveiled by the Government, which caps prices been set at £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas, many businesses will still be paying record energy bills.

The package is also only set for six months, leaving businesses in the lurch from next spring.

While the cap is considerably lower than current wholesale costs, it is still double the average price for business energy costs in October 2021.

Sectors particularly at risk of higher energy bills include high users of energy such as chemical and food manufacturers, alongside the hospitality sector as well as sectors such as residential care.

Small and medium sized enterprises which do not have the resources to secure more favourable deals are also likely to find themselves in difficulties.

These problems could lead to further closures and job losses across the economy.

Michael Pallott, Partner at Mazars said: “Small businesses – and even some larger ones – across the UK are heading for a tough winter. The rise in businesses closed down due to non-payment of energy bills shows just how badly many businesses are suffering already.”

“As the economy slows and many businesses still see their energy bills rise, we are likely to see many more closures in the months ahead.”