There was some good news for businesses recently as the rate of inflation fell in February, due to lower utility costs, including electricity prices for commercial use. The consumer price index (CPI) fell to 3.4%, according to the Office for National Statistics (ONS). This was partly due to cuts by utility providers and ensured that inflation was at its lowest level for 15 months.
Meanwhile, heavy users of electricity have voiced their opposition to the government’s green energy policies. The head of Tata Steel’s European operations argued that the cost of environmental levies, such as the Renewables Obligation, meant that business electricity prices were up to 50% higher than the equivalent prices in Western European countries, such as France, Germany and the Netherlands. The company maintained that this meant the UK plants were operating at a competitive disadvantage. Tata Steel is one of the UK’s biggest users of electricity. However the Department of Energy and Climate Change countered that UK business electricity prices for heavy users were in the mid-range of the original 15 EU members.
Unfortunately, in other news the situation for lighter users of energy is hardly much brighter, particularly the longer term outlook. According to research by the Royal Institution of Chartered Surveyors (RICS), annual business electricity prices may rise by up to £250 per annum by 2030 for the retail sector and office-based businesses. The rise is being blamed on a need for increased use of air conditioning for cooling buildings as temperatures rise by a projected 2 degrees Celsius.