Grant Shapps is facing fresh calls to overhaul the energy regulator’s powers amid growing fears for hospitality businesses’ ability to withstand soaring power costs.

Sky News has seen a letter from Kate Nicholls, chief executive of UK Hospitality, to the energy secretary in which she demands that Ofgem be allowed to tackle suppliers’ handling of business customers’ ancillary energy costs.

The letter is the latest in a string of warnings from the trade body about its members’ battle to contend with the impact of higher energy prices.

The government has pledged to extend financial support to companies in energy-intensive industries such as manufacturing, but has left those in consumer-facing sectors like retail and hospitality facing renewed uncertainty.

“We… have concerns about the extent of Ofgem’s powers and their ability to act at the pace necessary to provide the support businesses require,” Ms Nicholls wrote.

“In particular we need to see Ofgem take action on non-commodity, service and access charges as well as security deposits and terms of supply which had the potential to undermine government support.”

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‘Who’s going to pay for energy bills?’

She warned Mr Shapps that many companies would not feel the benefit of falling wholesale energy prices for another six months, and reminded him that nearly half of hospitality businesses had fixed their energy contracts at high prices during the second half of last year.

“Due to a severe lack of competition in the market most hospitality businesses were forced to accept very high prices fixed for at least a year,” the letter said.

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“Consequently, half the businesses in our sector will be locked in at extortionate prices as energy support is significantly reduced from April.

“This could have a potentially terminal impact on thousands of businesses that are simply unable to afford their bills.”

Jeremy Hunt, the chancellor, is expected to set out further details of energy support in this month’s Budget statement.

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