Energy bills likely to carry on rising

Hotel and restaurant energy bills have spiralled by 65% in the past three years and are likely to carry on rising in 2007.

But the recent price hikes announced by British Gas, ScottishPower and EDF last week will not hit hospitality, according to British Hospitality Association chief executive Bob Cotton. He said domestic prices were merely catching up with commercial rates, which had risen by 50% in the past six months.

New Compass chairman Sir Roy Gardner warned in June - his final month as chief executive of British Gas owner Centrica - that the "volatility and unpredictability" of the UK energy industry would persist into next year.

Prices have soared since late 2003, when North Sea gas started running out faster than predicted, forcing Britain to import more gas, which is used to produce 40% of electricity, from Europe. Since then wholesale prices in the UK have soared by 266% to become the highest in the world.

Gardner believes nothing will improve until the European Commission tackles the "dysfunctional" and "monopoly-driven" markets of the Continent.

But Cotton believes operators can still achieve better contracts by shopping around or pooling purchasing power. Joining forces with local rivals - or using an energy broker - can trim up to 5% off bills.

Another way to keep costs in check is to save energy, which could cut up to 20% off bills. Paul Savage, business services manager at advisory body EnergyWatch, said: "Energy has become such a significant part of the cost equation that it needs to receive the right level of management attention within a business."

He advised small firms to examine their energy contracts carefully as many were locked into unsuitable contracts with high termination fees.

• For more advice see www.energywatch.org, www.hospitableclimates.org, and www.consideratehoteliers.com, where there's a free, downloadable Buyer's Guide to Reducing Energy Costs in the Hospitality Sector.

Energy-saving tips

• Compare quotes from different energy suppliers.
• Make sure you're on the right tariff for the right time of day.
• Take out five-year contracts to negate increases.
• Introduce energy-saving initiatives.
• Form a consortium to increase purchasing power and share best practice.
• Install alternative energy sources, eg, solar panels or wind-powered generators.

By Angela Frewin