Will energy prices force small businesses in to liquidation?
Discussion
zoomy said:
We are currently paying
9.48p/kwh days
7.67p/kwh nights.
That’s very cheap. I’ll buy a van load of night time electrons off you at 15p if you’re interested.9.48p/kwh days
7.67p/kwh nights.
We’re only a high street office on normal meters but have just signed up to a 2 year contract for gas at 17.5p/kWh (was 3.8).
Cheapest I’ve been offered for electricity is 58p/kWh earlier this week (quadruple what we are paying now) so I would hope 75p is just media headlines. I’m getting callbacks tomorrow so I’ll update if prices have changed.
Haven’t signed up for electricity yet… I think we’re going to leave it right until the last minute (existing contract expires end of October) and gamble that somebody “in charge” does something.
Capping domestic prices is all very well but most of those domestic bills are paid from wages…
pomp1 said:
Sheepshanks said:
pomp1 said:
A decent nursery is a very profitable enterprise though and they can probably stomach it. 40 kids a day in should make about £140k a year so they can accommodate the extra costs. It’s the small ones of say 20 kids or the quiet ones that will struggle.
Be interested to see the rough maths behind that - they're closing left right and centre around us, in West Cheshire. They were apparently struggling anyway with the free hours for older kids that are way underfunded.So;
40kids x£50x 5days a week x 51 weeks (most charge year round = £510k a year turnover. Before anyone says about govt funding, this is paid at £4.25+ per hour so then add on parents fees to take you to £50 a day
£510k-58% staffing costs) =214k
Less rent and rate costs of £45k =£170k
Insurance is about £2500 a year
Phone say £1000 a year
Some food/ nappies etc and energy bills.
As long as occupancy is above 40 kids a year, ie you add a few more over the year then there really is no way you can’t make decent money. I do.
How much do you pay your staff?
zoomy said:
Is anybody on here on a 1/2 hourly meter?
I run an engineering company and employ 60 nice folk.
We are currently paying
9.48p/kwh days
7.67p/kwh nights.
Our bill comes in around £10k month. We run days and nights and usually leave all machines on as we run no afters shift ready for the night shift to run.
Last month we cut back on all our electric and got the bill down to £8.7k.
If we had to renew now and the rates are truly +75.0p/kwh we are insolvent!!
Fortunately we are in contract with Gazprom who I hope survive until May 2024 at these rates.
My competitors I don't know when they are due to renew their electric but this will be very distressing for companies, families and the company owners who care.
I am reading this thread with massive concern for our industrial survival and my survival to be honest it scares me.
We are on a half hourly meter and also in engineering, our fixed contract ends next month.I run an engineering company and employ 60 nice folk.
We are currently paying
9.48p/kwh days
7.67p/kwh nights.
Our bill comes in around £10k month. We run days and nights and usually leave all machines on as we run no afters shift ready for the night shift to run.
Last month we cut back on all our electric and got the bill down to £8.7k.
If we had to renew now and the rates are truly +75.0p/kwh we are insolvent!!
Fortunately we are in contract with Gazprom who I hope survive until May 2024 at these rates.
My competitors I don't know when they are due to renew their electric but this will be very distressing for companies, families and the company owners who care.
I am reading this thread with massive concern for our industrial survival and my survival to be honest it scares me.
Currently paying 13.8 day and 9.77 nights, just been quoted 90.0 day and 73.1 nights by our current supplier EON! Cheapest I've managed to get it to is 81.36 day and 59.72 night for a 3 year contract but I dont know whether it's worth fixing for that length of period, its a significant increase thats just going to be passed on to our customers somehow. Variable wascurrently quoted at 44.67 days abd 34.69 nights.
What is everyone else doing with renewals and how long are you fixing for?
MyM2006 said:
We are on a half hourly meter and also in engineering, our fixed contract ends next month.
Currently paying 13.8 day and 9.77 nights, just been quoted 90.0 day and 73.1 nights by our current supplier EON! Cheapest I've managed to get it to is 81.36 day and 59.72 night for a 3 year contract but I dont know whether it's worth fixing for that length of period, its a significant increase thats just going to be passed on to our customers somehow. Variable wascurrently quoted at 44.67 days abd 34.69 nights.
What is everyone else doing with renewals and how long are you fixing for?
Blimey, I'd go variable. The Russian nonsense ought to be sorted within 12-18 months and supply ought to be more stable by then. I have used ought twice though.Currently paying 13.8 day and 9.77 nights, just been quoted 90.0 day and 73.1 nights by our current supplier EON! Cheapest I've managed to get it to is 81.36 day and 59.72 night for a 3 year contract but I dont know whether it's worth fixing for that length of period, its a significant increase thats just going to be passed on to our customers somehow. Variable wascurrently quoted at 44.67 days abd 34.69 nights.
What is everyone else doing with renewals and how long are you fixing for?
Ean218 said:
MyM2006 said:
We are on a half hourly meter and also in engineering, our fixed contract ends next month.
Currently paying 13.8 day and 9.77 nights, just been quoted 90.0 day and 73.1 nights by our current supplier EON! Cheapest I've managed to get it to is 81.36 day and 59.72 night for a 3 year contract but I dont know whether it's worth fixing for that length of period, its a significant increase thats just going to be passed on to our customers somehow. Variable wascurrently quoted at 44.67 days abd 34.69 nights.
What is everyone else doing with renewals and how long are you fixing for?
Blimey, I'd go variable. The Russian nonsense ought to be sorted within 12-18 months and supply ought to be more stable by then. I have used ought twice though.Currently paying 13.8 day and 9.77 nights, just been quoted 90.0 day and 73.1 nights by our current supplier EON! Cheapest I've managed to get it to is 81.36 day and 59.72 night for a 3 year contract but I dont know whether it's worth fixing for that length of period, its a significant increase thats just going to be passed on to our customers somehow. Variable wascurrently quoted at 44.67 days abd 34.69 nights.
What is everyone else doing with renewals and how long are you fixing for?
This will see a lot of businesses go under - after my earlier post I asked around our industrial estate and there's two companies (out of 15) who will outright close their doors if it breaches £1/unit.
We're not far off that, given we currently pay 78p and it's going to get a lot worse.
We're not far off that, given we currently pay 78p and it's going to get a lot worse.
mattyprice4004 said:
This will see a lot of businesses go under - after my earlier post I asked around our industrial estate and there's two companies (out of 15) who will outright close their doors if it breaches £1/unit.
We're not far off that, given we currently pay 78p and it's going to get a lot worse.
When I was speaking to some electricity suppliers today trying to sort out what im doing they advised that the current variable rate is at 49P'ish but would be going to £1.25 on the 1st October. We're not far off that, given we currently pay 78p and it's going to get a lot worse.
The rates from 75p to £1 are genuine, that's what we're getting quotes for for our clients. At the moment, it might be best to go onto out of contract rates for a few weeks, in the hope that the government do something for SME business's when the new Prime Minister is installed next week. The energy conmpanies systems haven't caught up yet with new variable out of contract rates. But I suspect they will go to well over £1 from 1st October of maybe 1st November.
All you can do as a single site company is lock in for 1, 2 or 3 years, that's a pure gamble as to which length will be better in the end. If rates do drop significantly in that period you can "go bust" to get out of the contract and start a new co. A change of tenancy (COT) as it's known is typically the only way out of a commercial energy contract.
If the new Prime Minister doesn't announce something major (like the Covid Bounce Back loans was massive injection of cash to the economy) then we will see a massive crash in the economy. Lot's of companies going bust because they can't afford the energy bills, then those people now out of a job not being able to pay their energy bill at home.
Whatever they announce it will have winners and losers as always. Loads of options e.g off top of my head:
1) Price cap for SME business renewals (where you draw the line as to how big an SME is, will be a headache)
2) Nationalise an energy supplier and become a competitor in the market offering subsidised tariffs
3) Energy loans at BBL rate of 2.5% i.e. Will lend you your estimated annual energy bill value for 12month energy contract with a payback period of say 5 years. Done through the energy company, so you can't use the cash for other purposes. Keep the scheme running for as long as free market rates are above say 35p/kWh.
4) Companies with less than a perfect credit score, the government will back the contract so the energy companies can offer energy contracts without a risk premium or cash deposit being required.
5) Massively subsidise Solar and other renewable energy installations in commercial settings already 3 to 4 year ROI with these sky high p/kWh, but make that an 18mth payback and no commercial roof would be solar free very rapidly and there would be a huge leap forward on the journey to net zero.
If they did 1, 3 & 5 immediately I think that woudl give us a short sharp shock only rather than a long term recession that will take years to recover from.
All you can do as a single site company is lock in for 1, 2 or 3 years, that's a pure gamble as to which length will be better in the end. If rates do drop significantly in that period you can "go bust" to get out of the contract and start a new co. A change of tenancy (COT) as it's known is typically the only way out of a commercial energy contract.
If the new Prime Minister doesn't announce something major (like the Covid Bounce Back loans was massive injection of cash to the economy) then we will see a massive crash in the economy. Lot's of companies going bust because they can't afford the energy bills, then those people now out of a job not being able to pay their energy bill at home.
Whatever they announce it will have winners and losers as always. Loads of options e.g off top of my head:
1) Price cap for SME business renewals (where you draw the line as to how big an SME is, will be a headache)
2) Nationalise an energy supplier and become a competitor in the market offering subsidised tariffs
3) Energy loans at BBL rate of 2.5% i.e. Will lend you your estimated annual energy bill value for 12month energy contract with a payback period of say 5 years. Done through the energy company, so you can't use the cash for other purposes. Keep the scheme running for as long as free market rates are above say 35p/kWh.
4) Companies with less than a perfect credit score, the government will back the contract so the energy companies can offer energy contracts without a risk premium or cash deposit being required.
5) Massively subsidise Solar and other renewable energy installations in commercial settings already 3 to 4 year ROI with these sky high p/kWh, but make that an 18mth payback and no commercial roof would be solar free very rapidly and there would be a huge leap forward on the journey to net zero.
If they did 1, 3 & 5 immediately I think that woudl give us a short sharp shock only rather than a long term recession that will take years to recover from.
I think now, rather than throwing good money after bad, all resources should be spent on safeguarding energy supplies in the future, and making the UK self sufficient for energy. That’s got to be the goal. So, the short term will be messy, and lots of businesses might go under, but long term it will provide much needed energy security for both households and businesses.
Option 5 above could form a part of that.
Option 5 above could form a part of that.
Mr Overheads said:
The rates from 75p to £1 are genuine, that's what we're getting quotes for for our clients. At the moment, it might be best to go onto out of contract rates for a few weeks, in the hope that the government do something for SME business's when the new Prime Minister is installed next week. The energy conmpanies systems haven't caught up yet with new variable out of contract rates. But I suspect they will go to well over £1 from 1st October of maybe 1st November.
All you can do as a single site company is lock in for 1, 2 or 3 years, that's a pure gamble as to which length will be better in the end. If rates do drop significantly in that period you can "go bust" to get out of the contract and start a new co. A change of tenancy (COT) as it's known is typically the only way out of a commercial energy contract.
If the new Prime Minister doesn't announce something major (like the Covid Bounce Back loans was massive injection of cash to the economy) then we will see a massive crash in the economy. Lot's of companies going bust because they can't afford the energy bills, then those people now out of a job not being able to pay their energy bill at home.
Whatever they announce it will have winners and losers as always. Loads of options e.g off top of my head:
1) Price cap for SME business renewals (where you draw the line as to how big an SME is, will be a headache)
2) Nationalise an energy supplier and become a competitor in the market offering subsidised tariffs
3) Energy loans at BBL rate of 2.5% i.e. Will lend you your estimated annual energy bill value for 12month energy contract with a payback period of say 5 years. Done through the energy company, so you can't use the cash for other purposes. Keep the scheme running for as long as free market rates are above say 35p/kWh.
4) Companies with less than a perfect credit score, the government will back the contract so the energy companies can offer energy contracts without a risk premium or cash deposit being required.
5) Massively subsidise Solar and other renewable energy installations in commercial settings already 3 to 4 year ROI with these sky high p/kWh, but make that an 18mth payback and no commercial roof would be solar free very rapidly and there would be a huge leap forward on the journey to net zero.
If they did 1, 3 & 5 immediately I think that woudl give us a short sharp shock only rather than a long term recession that will take years to recover from.
I believe on the continent, France in particular, they've introduced price caps on the cost of wholesale energy, which has gone a long way to controlling the run away (energy price) inflation we're seeing in this country. The UK government needs to intervene at the earliest possible point in the chain, and then put measures in place to ensure price caps/lower costs get passed on to end consumers.All you can do as a single site company is lock in for 1, 2 or 3 years, that's a pure gamble as to which length will be better in the end. If rates do drop significantly in that period you can "go bust" to get out of the contract and start a new co. A change of tenancy (COT) as it's known is typically the only way out of a commercial energy contract.
If the new Prime Minister doesn't announce something major (like the Covid Bounce Back loans was massive injection of cash to the economy) then we will see a massive crash in the economy. Lot's of companies going bust because they can't afford the energy bills, then those people now out of a job not being able to pay their energy bill at home.
Whatever they announce it will have winners and losers as always. Loads of options e.g off top of my head:
1) Price cap for SME business renewals (where you draw the line as to how big an SME is, will be a headache)
2) Nationalise an energy supplier and become a competitor in the market offering subsidised tariffs
3) Energy loans at BBL rate of 2.5% i.e. Will lend you your estimated annual energy bill value for 12month energy contract with a payback period of say 5 years. Done through the energy company, so you can't use the cash for other purposes. Keep the scheme running for as long as free market rates are above say 35p/kWh.
4) Companies with less than a perfect credit score, the government will back the contract so the energy companies can offer energy contracts without a risk premium or cash deposit being required.
5) Massively subsidise Solar and other renewable energy installations in commercial settings already 3 to 4 year ROI with these sky high p/kWh, but make that an 18mth payback and no commercial roof would be solar free very rapidly and there would be a huge leap forward on the journey to net zero.
If they did 1, 3 & 5 immediately I think that woudl give us a short sharp shock only rather than a long term recession that will take years to recover from.
Number 5 on your list we should have been doing years ago anyway!!
Mr Overheads said:
5) Massively subsidise Solar and other renewable energy installations in commercial settings already 3 to 4 year ROI with these sky high p/kWh, but make that an 18mth payback and no commercial roof would be solar free very rapidly and there would be a huge leap forward on the journey to net zero.
The issue with solar is that demand is already sky high and parts availability is a nightmare. No point in offering incentives on products you can't get.The only viable policy solution I see is to remove sanctions against Russia in return for them opening up the taps again, to bring an immediate reduction in gas and therefore energy costs. It won't happen though.
Every other option is expensive to the point of being unaffordable. If the current energy costs continue, businesses will be going bust left right and centre, and then you'll have the unemployment crisis on top of the cost of living crisis.
I've just done a quick analysis of our work electric contracts so see the potential damage.
Annual usage is 161,000 kwh
Average rate currently payable is 16.1p day usage
So current annual cost excluding VAT, night rates and standing charge is £26k
Using 75p as a guide, this would go up by £95k per annum. Crikey.
We have contracts for all of these ranging from 2023 to 2026 luckily, but jeez what a crazy situation incoming :-(
Annual usage is 161,000 kwh
Average rate currently payable is 16.1p day usage
So current annual cost excluding VAT, night rates and standing charge is £26k
Using 75p as a guide, this would go up by £95k per annum. Crikey.
We have contracts for all of these ranging from 2023 to 2026 luckily, but jeez what a crazy situation incoming :-(
It is extremely concerning for business.
In my opinion, the increase in energy costs for businesses is going to cause huge amounts of economic damage, and likely be worse than anyone realises.
I have been listening to a steady steam of business owners calling discussion programmes over the last few weeks, and their situation is just as mentioned in this thread. They make themselves a reasonable profit right now, but their predicted bills will see that completely wiped out, and then some. The knock on effects will be the redundancy of staff, and all the rest of it.
In my opinion, the increase in energy costs for businesses is going to cause huge amounts of economic damage, and likely be worse than anyone realises.
I have been listening to a steady steam of business owners calling discussion programmes over the last few weeks, and their situation is just as mentioned in this thread. They make themselves a reasonable profit right now, but their predicted bills will see that completely wiped out, and then some. The knock on effects will be the redundancy of staff, and all the rest of it.
MOBB said:
I've just done a quick analysis of our work electric contracts so see the potential damage.
Annual usage is 161,000 kwh
Average rate currently payable is 16.1p day usage
So current annual cost excluding VAT, night rates and standing charge is £26k
Using 75p as a guide, this would go up by £95k per annum. Crikey.
We have contracts for all of these ranging from 2023 to 2026 luckily, but jeez what a crazy situation incoming :-(
And to add, we are a small flooring company with 6 sites, not an especially high user of electric really.Annual usage is 161,000 kwh
Average rate currently payable is 16.1p day usage
So current annual cost excluding VAT, night rates and standing charge is £26k
Using 75p as a guide, this would go up by £95k per annum. Crikey.
We have contracts for all of these ranging from 2023 to 2026 luckily, but jeez what a crazy situation incoming :-(
I do the accounts of a pub/restaurant that makes about £30k per annum net profit. There is little doubt that they will be closing the doors soon.
MOBB said:
I do the accounts of a pub/restaurant that makes about £30k per annum net profit. There is little doubt that they will be closing the doors soon.
Loads of these around, and unfortunately unless something changes soon a significant number will go to the wall.A local pub to me has recently decided it has to close the kitchen and stop serving food as can't afford the energy costs associated. That can't be good long term.
JUst been on holiday in the Lakes and then in NOrthumberland. Lot's of pubs only serving lunch or dinner service, no mid afternoon food. Suspect that's a small step to start reducing energy costs. Next step will be closing Monday, Tuesday, only evenings Wednesday, Thursday and then full hours Friday, Saturday, Sunday. Obviously depends on the location and typical customer as to what hours are most apprpriate.
Many will close completely.
Many will close completely.
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