‘Not good enough’: Four companies give their verdict on the energy plan
Businesses have been warning of an energy Armageddon, with those looking to sign new gas and electricity contracts this autumn quoted prices as high as 10 times normal rates. Many have already closed their doors, while others warned they would not be able to continue without government help.
On Wednesday, the new business secretary, Jacob Rees-Mogg, stepped forward with his solution: the government will cap wholesale prices of gas and electricity for businesses, charities and public sector organisations. Electricity prices will be fixed at half what businesses were expecting to pay this winter, but will still be double the cost last October.
The cap will only apply to contracts entered into after 1 April 2022, and will only last until 31 March.
Four companies give their verdict.
As one of the UK’s biggest industrial companies, DS Smith spends a lot of time and money hedging its energy purchases, protecting itself against big price moves. But the company, one of the biggest suppliers of cardboard boxes to Amazon and other delivery firms, uses large amounts of energy to pulp and dry recycled cardboard. Energy prices are a key risk, according to its annual report in July.
Miles Roberts, the group chief executive of DS Smith, said the UK’s manufacturing sector needs a “coherent energy strategy”, on top of the welcome support for the next few months.
“It’s positive to see the government is acting and recognising the magnitude of the energy challenge in the UK, but this is a short-term approach,” he said. “We need certainty for the longer term, because this is not likely to be a situation that will disappear after six months.”
Energy costs represent between 20% and 35% of input costs for paper producers, depending on the grade of
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