Energy: Non-Domestic Energy Consumers Short-Life Woking Group minutes - July 2023

Minutes from the meeting of the group on 4 July 2023.

Attendees and apologies

  • Gillian Martin MSP, Minister for Energy and the Environment 
  • Chambers of Commerce 
  • Federation of Small Businesses (FSB) 
  • Scottish Enterprise 
  • Scottish Tourism Alliance 
  • UK Hospitality
  • Business Energy Scotland 
  • Energy UK 
  • Community Leisure UK
  • Scottish Retail Consortium 
  • Findlater’s Fine Foods
  • Graham’s the Family Dairy 
  • Consumer Scotland 
  • Advice Direct Scotland 
  • Ofgem 
  • Council of Scottish Local Authorities (COSLA)

Items and actions

Opening remarks 

The minister welcomed all attendees to the meeting and made the following points:

  • this group is an opportunity to take real action to help businesses operate with confidence 
  • there is still ongoing uncertainty around energy markets and energy prices are higher at the moment than they were this time last year 
  • this meeting stems from the two energy summits last year held by the former First Minister (a key objective of which was to establish practical collaborative actions we could take with partners, within our limited powers, to help businesses that are struggling with the high cost of energy) 
  • the minister is also chairing the Vulnerable Energy Consumers Short-Life Working Group and the Rural Energy Consumers Short-Life Working Group 
  • the minister is keen that the work of the groups helps the Scottish Government refine our calls upon the UK Government ahead of the Autumn Statement 
  • members were asked to keep contributions to the discussion outcome-focused

Agenda item 1: Business vulnerability

The Federation of Small Business (FSB) opened the session by making the following points: 

  • small businesses make up 98% of businesses in Scotland
  • discussions around vulnerable businesses has focused on energy intensive businesses
  • keen to encourage decision makers to look at vulnerability and energy intensity in a relative manner 
  • the cost of living crisis has come on the back of the Covid pandemic when businesses’ cash reserves were already depleted
  • ‘blend and extend’ contracts can help businesses spread the cost of energy (where businesses signed contracts when prices were higher than currently)
  • keen to encourage suppliers to offer a ‘blend and extend’ option, especially as we approach winter
  • the Energy Bills Discount Scheme (EBDS) wasn’t a meaningful intervention – some Small and Medium Enterprises (SMEs) weren’t eligible for it and it only made a marginal difference for those that were

The following points were made during the plenary discussion: 

  • the massive increase in standing charges is having a huge impact on businesses (one energy company said this is to recover the costs of taking over bad debt from customers whose energy companies folded last year)
  • concerns were raised about the large security deposits being asked of businesses signing up to new contracts with energy suppliers
  • ‘blend and extend’ contracts allow businesses longer to pay back debt, however, these contracts don’t address the whole challenge and there are limits  since these contracts affect the energy supplier’s cash flow and its hedging approach to energy purchase
  • ‘blend and extend’ contracts call into question the validity of energy contracts if these can be changed part way through by a move from a standard contract to a ‘blend and extend’ contract
  • although some businesses are unhappy at being tied into contracts at higher prices than those currently available, last year suppliers were encouraged to offer standard contracts to avoid businesses having to pay for energy at the then higher priced deemed rates
  • for Scottish Tourism Alliance (STA) members, energy is the number one issue being raised around business confidence and there is currently a 5% closure rate in hospitality businesses 
  • a STA survey earlier this year shows that 51% of businesses are receiving higher quotes despite energy prices falling and STA have written to the Chancellor highlighting these concerns

Agenda item 2 - Energy Bills Discount Scheme (EBSS) 

Graham’s the Family Dairy opened the session by making the following points: 

  • energy is a big cost for businesses and last year was very difficult (although the UK Government energy bills support provided to the business was a significant help, not all businesses are eligible) 
  • energy prices go up quickly for businesses but come down slowly

The following points were made during the plenary discussion:

  • the energy crisis is a long term crisis
  • it is clear that different businesses can have very different experiences and we need more data to understand these and a query was raised as to whether the New Deal For Business Group could supply this
  • the more that can be done to help businesses become more energy efficient the better and there is a role for both the UK and Scottish Governments to play in delivering this
  • a Chambers of Commerce quarterly survey showed the impact of the Energy Bills Relief Scheme (EBRS): prior to the scheme, 80% of respondents said energy was their main concern, this went down to 40% when the scheme came in and when the Energy Bills Discount Scheme (EBDS) (which provides a lower level of support) replaced the EBRS, the percentage of respondents for whom energy was their main concern returned to 80%
  • energy prices would be reduced by 20% if renewables levies were paid for via general taxation
  • a STA surveys show energy is still a main concern for businesses and there is a risk to jobs in hospitality with businesses closing due to energy and other increased costs (lots of hospitality businesses are not in any contractual agreement and less than 75% of businesses have more than 3 months liquidity)

Agenda item 3: Advice services

Scottish Enterprise opened the session by making the following points: 

  • recent years have been challenging, but there is a lot of advice and funding support available
  • help avenues include: enterprise agencies, local authorities, Business Energy Scotland (BES) (who provide fully funded reviews and access to the SME loan Fund), the EXTEND project which provides access to net zero support, and the Find Business Support portal which signposts businesses to sources of support

The following points were made during the plenary discussion:

  • Advice Direct Scotland (ADS) provides advice to businesses with ten employees or less but there is a difficulty with smaller non-domestic energy suppliers that don’t have an account manager since energy suppliers aren’t providing the relevant contact details to allow ADS to help consumers (ADS are tier one for consumers wanting to raise a complaint and without the correct contacts the complaints process takes longer than it should)
  • Energy UK is happy to help with identifying contacts within specific suppliers to help with the consumer advice journey
  • the Scottish Sustainability Partnership coordinates and helps companies access the right support via an internal network 
  • small businesses have similar behaviours to individuals, and we need a proactive approach to offering advice to businesses to increase businesses confidence particularly given the scams landscape landscape (Glathe Scottish Governmentow City Regions are offering a proactive approach and more of this could be done)
  • BES has been up and running for a year and is very busy and Government funding can only go so far to cope with demand 
  • consumers often approach BES in a state of emergency, often when it’s too late and the business ceases operating before it can be helped
  • if local authorities provided support and advice consumers could have confidence they were not being scammed
  • STA have had positive feedback from members on the support received from BES, particularly in terms of “quick wins”

Agenda item 4: Any other business 

  • a query was raised about whether the Scottish Government had any insight on movement on levies from the UK Government and officials advised that there is no clear timescale but the Scottish Government is continuing to push for clarity on this and will keep members updated
  • the minister advised that levies would be included in her letter to the UK Government 
  • officials will circulate the actions along with an ask for actions leads by the end of the week 

Closing remarks: 

  • the minister advised participants that the next meeting of the group will be chaired by a Scottish Government senior official, and the final meeting will be in September before the announcement of the new price cap and Autumn statement
  • the minister thanked everyone for their time and advised participants who wish to submit extra material on the topics discussed to send this to the Scottish Government officials who organised the meeting or directly to herself

Summary of action points

Support for vulnerable businesses:

  • call upon the UK Government to view the energy intensive category in relative terms when determining eligibilty criteria for energy bills support for businesses 
  • work with suppliers to encourage the widening availability of 'blend and extend' scheme or similar flexibility around energy bill management
  • call upon Ofgem to consider the impact of standing charges on businesses and explore ways in which these can be mitigated
  • continue with our calls on the UK Government for energy market reform

 Energy Bills Discount Scheme / UK Government Support: 

  • explore available forums (within the Scottish Government) where we can analyse the business landscape and identify where support is needed the most
  • look at ways in which we can accelerate energy efficiency and net zero measures being adapted by business to help with energy cost
  • continue to call upon the UK Government to remove levies on bills to general taxation

 Advice Services: 

  • explore ways in which we can be sure that as many businesses as possible have access to self-help resources as well as advice services to help deliver support quickly
  • partners to work together on information webinar for businesses to highlight Energy Advice Scotland services
  • work to ensure Energy Advice Scotland can have direct access to non-domestic energy suppliers similar to the domestic ones
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