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A number of energy firms have been referred to the Competition Commission by regulator Ofgem due to complaints about their excessive rates. The EU Max Price, which regulates energy prices, is anticipated to increase by more than 30% in the next week, placing additional pressure on companies already trying to expand in the present economic environment. However, recent study has revealed that French businesses have negotiated lower electricity costs, providing them an advantage over British businesses that must pay far higher prices.
The high cost of energy has drawn criticism for the prices charged by electricity companies, and the French government has announced that it will subsidise this cost. This comes after Ofgem reported several companies to the Competition Commission due to worries about price rises.
The EU Max Price is anticipated to increase by more than 30% the following week as a result of public and legislative pressure on suppliers to stop the bitterly cold winters that prevent people from affording to heat their houses adequately.
The EU Max Price has been adopted, among other things, to stop cross-border arbitrage. For instance, the cost of electricity in France is 25% less than it is in Spain and Italy. As a result, French companies sell their power at a loss to other countries. It’s worth noting that this does not only affect large corporations but also small businesses who cannot afford expensive electricity bills (this is especially true for small businesses located in southern European countries).
In addition to this issue, it’s important to remember that there are other factors which influence the price of electricity and gas for consumers across Europe:
In the UK, energy costs are continuing to rise and businesses in particular are struggling with these high prices. The French government has offered subsidies to businesses struggling with high energy prices and has managed to ease the pressure on its economy by doing so. However, the UK government has decided against imitating the French. Instead, in response to drastically rising electricity rates, the UK government is mulling ideas to subsidise bills for energy-intensive businesses like steel and cement.
Costs for businesses in the paper, ceramics, and glass industries would also be reduced as a result of the government measures, which were unveiled on Friday.
It has been criticised for not doing enough to help businesses with high energy costs but there are some things that can be done that could reduce some of this pressure on businesses:
The UK government has ruled out following the French’s lead and subsidising energy costs for businesses. Energy minister Claire Perry said: “There is no need to subsidise any business fuel prices, as these are set by commercial markets.” She added that there was a need for better information on energy use among SMEs, or small and medium enterprises (SMEs).
The government’s response comes after a report from the Committee for Energy Regulation (CER) warned that energy bills in France could rise by as much as €1.5bn (£1.3bn/$1.7bn) a year if the government does not amend its policy. The CER said it was concerned about “the potential cost of subsidies for renewable energy generation and transmission”, adding that “this could lead to an increase in electricity bills”.
It’s a great time for the UK to be going green. The country generates some of the most affordable renewable electricity in the world – just look at offshore wind, which has reached parity with gas and coal. Now, as we move towards a low-carbon economy, there are huge opportunities for British companies to take advantage of our position as global leaders in energy technology.
The French government has introduced a Clean Energy Plan to help tackle climate change and make France more environmentally friendly. The plan includes a proposal to subsidise energy costs for businesses and households to reduce emissions and improve air quality. While the UK’s government has ruled out following this lead in our own country, it may be worth looking at how successful such measures could be here in future.
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