Companies from industrial estates hit by a 400% rise in the price of energy

More than 50 companies on the same industrial estate are challenging their landlord after their electricity bills skyrocketed by 400%.

All the small businesses saw the price of electricity rise from 18p a unit to 78p, what their local MP described as “a terrible contract”.

Companies cannot find better deals because their energy is supplied by the company that owns the farm.

Mercia Real Estate insisted that it had achieved “the best value” for the tenants.

But the problems of those in the industrial estates have gone largely unnoticed.

They are particularly powerless because they cannot negotiate their own power contracts, but must trust their landlord to do so.

Phil and Linda Thorne’s electricity bill has increased by £50,000 for six months’ supply.

The couple runs a successful small business, called Custom Molded Polyurethane, which makes bespoke products such as specialty lifeboat rollers; heat resistant grips for ladders used by firefighters; and high-tech drilling protectors for the oil industry.

Their sophisticated ovens use a lot of energy, but the day I visited, they were all turned off.

“We have reduced production to three days a week,” Phil said.

“It’s the only thing we can do to reduce our electricity use, but it’s hurting business.”

Their electricity bills used to be around £1,600 a month, and by the end of 2022, they knew the power contract was up for renewal.

Thorne knew that prices had risen all over the world.

“We expected it to double, but it actually increased 426%,” he said.

In April, without warning, his company received a bill for £9,500 for January usage and the same followed for February and March.

In July your bill will be about £60,000 instead of £10,000.

He said: “We’re a small company and we just can’t broadcast it. It’s crazy.”

The electricity contract at Lydney Industrial Estate is negotiated by the lessor, Aquarius Real Estate, which is in turn owned by Mercia Real Estate (MRE).

In December, MRE agreed a new power contract, raising the electricity price from 18p/kWh to 78p/kWh, covering the first six months of 2023.

All the businesses on the farm received the same invoices and the same price increases.

Simpsons, a motorsports repair shop, saw its bill rise from £800 to £2,500.

“Astronomical, ridiculous,” said owner Julian Simpson-Smith.

A couple who publish tabletop books with old photos of the local railways saw their bill rise from £125 a month to over £1,100.

At Harbor Café, they have stopped baking homemade cakes to reduce energy use.

But to pass the real cost on to customers on their bills, they would have to charge £12 for a piece of bacon, the owner said.

“That’s crazy,” said co-owner Trudy.

When I contacted the owners, Mercia Real Estate, they told me they had done the best they could.

Or, in his words: “The current contract was identified because it offered the best overall value.”

The company stated that for the last two years the companies in the industrial estate have benefited from a good electricity price.

Under a fixed contract, companies paid 18p/kWh.

At the time, MRE said, the average wholesale price for electricity was more than 36p/kWh, making the price for end-users even higher.

When the fixed contract came to an end in December, the developer decided to sign a new contract for a short period, as they expected energy prices to fall later in 2023. Therefore, the new price was relatively high at 78p/kWh.

But he insisted that the companies would see the benefits of the contract in July.

In a statement, MRE said: “With the July rollover options received for 50% of the current price, we believe the strategy employed has been and will continue to perform below the market average for the period.”

The companies on the property are still unhappy, but they have very little to say about their power deal.

They can challenge the landlord’s lease, but it’s hard to get them to change it.

At the Lydney Industrial Estate, they are working collectively to dispute the bills.

“At first I thought it was a joke,” carpenter Roger Vane told me.

In a shed packed with hardcover books filled with photos of old railways, Phil Parkhouse runs Lightmoor Press with his wife Heather.

He said: “The bill just says ‘Electricity: £1,100’.

“It doesn’t say how many units it’s for, what price they charge us per unit. Honestly, it’s a shame.”

They wrote to their MP, Mark Harper, who sits in the Cabinet as Transport Secretary.

Mr Harper, in turn, wrote to the chief executive of Mercia Real Estate, Samuel Clarke.

Harper said he was concerned that Mercia power broker Ginger Energy “has negotiated a terrible contract with Ecotricity.”

His letter continued: “The data I have seen suggests that non-domestic customers can expect to pay between 36p/kWh as a large business and 45p/kWh as a micro-enterprise. I do not accept claims that 78p/kwh is the better deal than Aquarius I could accept.”

Mercia Real Estate has apologized to the companies in the urbanization for their communication. The first his tenants knew about the new agreement was in April, three months after it began.

But the company insists that it has made the best possible deal for the tenants.

An MRE spokesperson said: “The combination of the old contract, the short-term contract and the upcoming renewal will provide good value for money to consumers, during what has been an extremely challenging period for both energy providers and the consumers”.

Energy experts agree that electricity prices are likely to fall from July, but for the dozens of small businesses on the Lydney industrial estate, a price drop doesn’t come soon enough.