Spiralling energy costs and standing charges on non-domestic electricity bills are adding huge inflationary pressures in the supply chain, the NFU has warned, with these hikes posing an existential threat to the viability of many farming businesses without action.
In a letter to Ofgem the NFU has raised concerns about the way the current system bases standing charges (the non-variable part of the bill) on a business’s peak energy use, so seasonal users end up paying high charges all year round. It calls for Ofgem to introduce a fair and more equitable distribution of costs for seasonal high-energy users.
NFU President Tom Bradshaw said: “Rising energy costs and the impact of increased standing charges are adding huge inflationary pressures in the supply chain. 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.
“Ofgem has already recognised that ‘a more enduring and strategic approach to standing charges and affordability’ is needed. We agree. That’s why we’re calling on Ofgem to introduce a new High Capacity Usage, Low Utilisation scheme, a fairer system that would reduce capacity charges for occasional high-power users.”