The higher price inflation is hitting companies of all sizes but it appears to be impacting extra-large businesses the most.

Already these businesses have seen electricity prices increase by 15% in Q1’21 compared to the same period last year according to BEIS(3). These companies are now paying more than medium-sized businesses for their electricity on a p/kWh basis and further increases are expected to be reported in Q2’21.

These extra-large customers are most likely to be on flexible contracts and as a result they would be first exposed to market price spikes due to their short term purchasing strategies.

In the mid-market space, price inflation is likely to have a greater impact on wholesalers, business services, transport and manufacturing firms, which typically consume more electricity on a per site basis than other sectors.

Wholesalers and business services account for 5% and 9% of all mid-size companies respectively and have a combined 18% share of total consumption. In contrast, retail businesses account for 41% of mid-market companies but are amongst the lowest users of electricity on a per site basis(6).

Sources & Notes:

(1) For the purposes of this report, a mid-sized business is defined as an energy user consuming 150MWh and 203MWh of electricity and gas respectively per annum

(2) Based on average annualised energy prices for a mid-sized business consuming 150MWh and 203MWh of electricity and gas respectively from a sample of 18 suppliers

(3) BEIS quarterly gas and electricity prices for the non-domestic sector including the Climate Change Levy, June 2021

www.gov.uk/government/statistical-data-sets/gas-and-electricity-prices-in-the-non-domestic-sector

(*) Estimated increases in Q2’21 based on average annualised energy prices for a mid-sized business consuming 150MWh and 203MWh of electricity and gas respectively from a sample of 18 suppliers

(4) Cornwall Insight: Power prices for SME’s reach record highs, 23rd June 2021

www.cornwall-insight.com/newsroom/all-news/power-prices-for-sme-s-reach-record-highs

(5) Business electricity and gas cost stack: one-to-five-year commodity and non-commodity forecasted costs for a sample business customer with a non-half hourly meter. Non-commodity costs include: Transmission & Distribution components (TNUoS, BSUoS, DUoS) and Charges & Levies (RO, CCL, CfDs, CM)

(6) Based on modelled consumption by SIC codes using Experian dataset as of May 2021