Businesses are facing gas bill hikes of up to 80% as the Iran war and disruption to key shipping routes sends wholesale prices soaring, according to experts.
Cornwall Insight said many companies are set for painful increases in their gas and electricity tariffs from April in a busy month for energy contract renewals, with no price cap in place to protect firms.
The group is forecasting that electricity costs for businesses have increased by between 10% to 30% since the war began in late February, while gas prices have soared by between 25% and 80%.
It said April is traditionally a major month for companies to roll off fixed rates, which is coinciding with the energy price shock caused by the Middle East conflict, causing many suppliers to pull cheaper deals and raise tariffs.
The average 12-month electricity contract for small industrial or commercial firms, such as larger retail and leisure sites or small manufacturers, would now cost an average £578,000, up 20% since early February, according to Cornwall Insight.
Meanwhile, gas bills for these companies have risen by nearly 60% to just over £1.02 million on average a year.
Jacob Briggs, energy users lead at Cornwall Insight, said: “Since the start of the month, business energy bill forecasts have soared.
“Many of these companies are already battling slimmer margins, so this rise in energy costs is not something they can simply absorb.
“For some firms, this could mean the difference between investing in growth this year or shelving their plans entirely, and for others, high bills could force some very difficult economic decisions.”
While large companies fix prices through energy hedging deals often months or years in advance, smaller firms are left exposed.
He said the Government must look at ways to support firms with energy costs as “there is no real safety net for businesses when the wholesale market spikes”.
“When fixed offers disappear and suppliers start pricing in uncertainty, companies are left with few viable choices,” he added.
