NFU seeks fairer electricity charging system
© Tim Scrivener Rising standing charges on non-domestic electricity bills and soaring energy costs are putting huge inflationary pressure on businesses across the food supply chain, the NFU has warned.
The union has raised concerns with energy regulator Ofgem that many food and farming businesses are unfairly hit with higher bills under the current system, due to fluctuating seasonal usage.
Ofgem’s current system calculates standing charges based on a business’s peak energy usage.
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This means that businesses which use more energy at certain times of year, such as arable enterprises with grain dryers, are forced to pay higher charges all year round.
NFU president Tom Bradshaw met with Ofgem chairman Mark McAllister earlier this year to discuss these concerns and has since written to him, urging Ofgem to introduce a fairer distribution system for seasonal high-energy users.
Mr Bradshaw said: “We’re hearing from many concerned farmers and growers that this is threatening their businesses, and in some cases, pushing them to the brink of closure.
“Production costs are high across the economy and have been for some time.
“But there’s a fairer way to approach the current standing charge model, one that would allow businesses to reinvest, improving efficiency and resilience.”
The NFU is calling on Ofgem to implement a new high capacity, low utilisation scheme aimed at reducing capacity charges for occasional high-power users.
Under review
A spokesman for Ofgem told Farmers Weekly that it had launched a review earlier this year to better understand how energy costs are changing.
The Energy System Cost Allocation and Recovery Review will explore how costs are currently recovered and consider alternative approaches.
Ofgem is currently reviewing responses to the consultation and is due to provide further details on the outcome of the cost allocation review in due course.
Jonathan Brearley, chief executive at Ofgem, said:
“We know customers have real concerns about fairness and transparency in their bills, especially around fixed costs.
“That’s why we’re asking big questions about how and where these costs are shared – and whether there are better, fairer ways to do it.
“The launch of this review is the next step in developing fairer pricing for a changing energy system, ensuring more choice for consumers while protecting those most in need.”