Wednesday, 7 December 2011

Industry stymied by energy firms' demands for upfront payments

The government's hopes of rebuilding the economy with a "march of the makers" risks being derailed by energy companies that are demanding huge upfront payments to power new factories.

Soaring energy prices, which are already hitting homeowners, are also forcing manufacturers to shut down plants or relocate their factories to other countries.

The British Ceramic Confederation said some members have been asked to pay deposits of up to £200,000 – the equivalent of four months' worth of power – before energy firms are willing to take them on as customers.

The problem compounds wider difficulties brought on by the economic downturn, said Laura Cohen, chief executive of the confederation.

"Five of our members have closed in the last few weeks," she said. "embers tell me they have seen their energy costs increase considerably in the last year,
typically by 30% or more, and in one case doubling. In addition, from 2013 they face a crippling array of climate-related taxes and costs in the UK through higher electricity [prices]."

Potteries and brickworks, which need huge amounts of gas and electricity to heat their kilns, are particularly hard hit, as are energy-intensive chemical and steel plants.

Among the victims are the Carradale, Broadmore and Normanton brickworks, which have shut recently along with Jesse Shirley, a Stoke-on-Trent pottery firm, which had been trading for 191 years.

An industry figure representing a smaller firm said: "I was looking for a new power connection and was told it would only be provided if I paid a deposit of £200,000 for electricity and £100,000 for gas."

Another industrialist said he abandoned plans to set up a new factory because he could not afford the upfront power costs.

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