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Last Updated: Tuesday, 27 September 2005, 14:42 GMT 15:42 UK
Watchdog makes energy price plea
Electricity pylons
Energywatch says energy costs are hurting businesses
Soaring energy prices are posing a serious threat to UK businesses of all sizes, a consumer watchdog has warned.

Utility consumer group Energywatch voiced its concerns at a meeting at the Labour party conference in Brighton.

Together with business leaders, Energywatch called for government intervention to help lower prices.

At the same meeting, the CBI also warned that firms may be forced to lay off staff and close down this winter, amid fears of a power shortage.

Low reserves

CBI chief Sir Digby Jones told Energy Minister Malcolm Wickes that low energy reserves were posing a serious risk to businesses, no matter what their size.

On Monday, he said companies were "incredibly worried" about the threat to supplies in coming months.

If increases continue there will be some partial closures and redundancies at least. At worst, firms will transfer production from the UK to elsewhere
David Workman, British Glass

Sir Digby added that "inadequate" UK planning meant that the UK only had enough gas in reserve to supply companies for 11 days, as against 55 in other European countries.

However, he did add that the problem was not expected to affect domestic consumers.

Following the meeting David Workman, director general of glass manufacturers' organisation British Glass, said there was "very little" the minister could do in the short term.

However, the minister did say he would look into what could be done to boost power supplies.

Urgent efforts were needed to cut the cost burdens for business and improve gas supplies - or firms could fail or be forced to axe staff, Mr Workman told the BBC.

"If you compare prices in the first quarter of 2003 to the forecasts for the first quarter of 2006, prices are expected to increase by 166%," Mr Workman said.

'Double whammy'

One UK firm, British Optical, has already moved its operations to the Far East, blaming high energy prices.

"If increases continue, there will be some partial closures and redundancies at least. At worst, firms will transfer production from the UK to elsewhere," Mr Workman said.

He also warned that if supplies remained low, companies could be forced to burn oil for power, increasing costs further.

"That would be a double whammy, as not only would firms have to pay very high oil prices but they would also face more costs if they break their emissions limits."

Under the European Union's Emissions Trading Scheme (EU ETS), companies are given carbon dioxide emission limits, but they can also trade in the emerging European carbon market.

'Broken market'

"Every business - from the smallest corner shop to the largest factory - is suffering," said Energywatch chief executive Allan Asher.

He added that public services were also being hit by rising energy costs.

Mr Asher called on the government to intervene in the energy market.

"Something is seriously wrong when British businesses and taxpayers are having to pay so much more for their energy, while the big offshore producers are awash with revenue," he said.

"The problem is that the market is broken and unless it's fixed, it will only get worse."


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