BBCA dry cleaner has said businesses just 10 miles away can charge a quarter of the price for services due to differing energy prices between regions.
Small and medium-sized businesses in north Wales and Merseyside are expected to pay 13% more in electricity bills than London from this month due to non-wholesale energy costs known as third-party charges.
Mike Jones, who runs Borras Dry Cleaners in Wrexham, said his company was being “penalised” by being charged 8% more than the UK average.
Energy bill forecaster Cornwall Insight said the forecasts highlighted the “stark regional disparities” faced by small businesses.
Mr Jones said his running costs were already high and the increase in energy bills would affect already low profit margins.
He said: “Pre-Covid we spent about £1,000 to £2,000 per month and now we’re probably paying £8,000 to £10,000.”
He said having to deal with the highest charges in the UK was hitting north Wales and Merseyside hard.
Small businesses are expected to pay almost £13,000 more per year than the average like-for-like enterprise in the UK and £19,000 more than London, according to Cornwall Insight’s research.
He added: “The problem is when 10 miles down the road there’s an English company who’s paying a fraction of the price that we are.
“Customers can find a company across the border which can serve them at a quarter of the price that we can do it.
“We’re a local business, employing local people and we’re penalised – for what reason? Nobody knows.”
What are third-party charges?
Third-party charges differ from region to region and make up about 60% of a business electricity bill.
They include all electricity costs outside the price of the fuel itself and are split into network charges like distribution and transmission costs, and policy costs such as funding for government initiatives like renewable energy.
Cornwall Insight carried out research into how companies would be affected by the difference in charges across the UK.
About 81% of UK businesses expect to raise prices due to higher energy bills from Tuesday, it found.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “These forecasts highlight the stark regional disparities in electricity costs for SMEs (small and medium-sized enterprises).
“The steep third-party charges faced by those in particular regions only serves to highlight the problems faced by those businesses that could already be operating on razor-thin margins.”
Mr Jones said: “You’ll look at a competitor and think ‘who’s going to go first?’ If the company goes first you’ll take on their work.
“Then you just take on more energy costs. We can’t put our prices up because it’s impossible. People will stop using us.”
The rise comes on top of recent increases in employers’ national insurance and other utility bills meaning the public is facing even higher prices as firms pass on additional costs.
Dr Lowrey said: “Now is the time for businesses to review their energy strategies, explore switching opportunities, and consider efficiency measures to help ease rising costs.”
Two women who are also worried about the rise in energy bills are Gemma Rowlands and Lauren Burdon, from Wrexham.
The pair run a support group for parents and are “shocked” by the increases in gas, electric and council tax.
Single mother Ms Rowlands said the situation was “not good” and it was “hard enough trying to support a child” without the added stress of rising bills.
“It’s making going shopping and getting food in harder,” she added.
“You’re having to think ‘oh it’s really cold’ but I can’t afford to put the heating on and we are having to use blankets instead.”
Similarly, her friend Ms Burdon said “the council tax has seemed to have shot up” which frustrates her as “there’s rubbish and potholes everywhere”.
“I know there’s a lot of beautification going on which is lovely but there’s still so much that needs doing.”
Ms Burdon also said she was angry about the increase in water bills as “there’s so much water waste”.
“Then you hear the people that are running it [water companies] are giving themselves £6m bonuses and we are struggling to put the kettle on it to fill it because we can’t afford the water to make a cup of tea.
“They are taking and taking from us.”
