// High street chains face soaring upfront costs as energy suppliers demand large deposits
// Retail and hospitality groups are calling for direct help amid mass closure warnings
Retailers are facing demands for millions of pounds in upfront payments from energy suppliers as deposits for gas and electricity bills.
A number of the major energy providers, including SSE and EDF, are asking some companies to put down huge deposits to cover bills in advance amid fears that the crisis will cause many small businesses to collapse.
Commercial businesses are not protected by the energy price cap and are typically on contracts that last a year or more.
However, many are being refused quotes from suppliers and face demands for large down payments amid growing pressure on their finances.
With energy prices soaring, the size of the deposit demanded by suppliers is often based on a share of anticipated annual costs.
Many business energy contracts are renewed in October, meaning sectors face a major crunch with bills and industry leaders have called for direct support on energy bills rather than just the broad tax cuts proposed by Conservative leadership favourite Liz Truss.
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Kate Nicholls, head of UKHospitality, said: “This is common as there is little trade credit insurance available to hospitality businesses because of the Covid challenges the sector faced and concerns about risk appetite.
“It means energy suppliers – and other suppliers – are asking for up front deposits to secure supply and these are usually based on a quarter or a six-month bill.”
She said in some cases “millions of pounds for a high street chain” were being demanded.
In response, an SSE spokesman said: “SSE Energy Solutions credit checks all new and renewing business customers. Depending on the outcome, customers may be asked for a security deposit.
“Each assessment is carried out on a case by case basis and to help mitigate risk. If a customer closes or transfers their account and all invoices have been paid, they will receive their security deposit refund, with any accrued interest added.”
An EDF spokesman said: “EDF uses an external credit scoring agency to assess customer’s credit worthiness and this informs the basis under which we are able to contract with customers.
“In some cases, for example where the customer has a poor credit score, we will request a security deposit (usually equal to around three months estimated energy spend) to permit a contract to be sold.”
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