Retailers warn energy bills to rise by £440m due to policy levies

The British Retail Consortium has urged the Chancellor to reduce green policy costs embedded in energy bills, warning that electricity expenses for the sector are projected to increase by £440m this year. Helen Dickinson, chief executive of the trade body, stated that immediate action is required to lower the numerous policy levies that are driving up costs for high street firms. She emphasised that these rising charges are inevitably pushing up prices for shoppers across the country.

According to research conducted by the BRC, which represents major retailers including Tesco, Sainsbury’s and Marks & Spencer, electricity costs for UK retailers are set to climb from £2.72bn last year to £3.16bn this year. The industry body noted that the majority of this increase is attributable to government-imposed charges rather than the global rise in energy prices linked to the Iran war. These policy costs now account for two-thirds of retailers’ electricity bills, placing significant financial pressure on the sector.

Specific levies contributing to this rise include Transmission Network Use of System charges, which fund grid construction and repairs and are expected to increase by 72 per cent, adding £200m to bills. The renewables obligation, which supports large-scale electricity generation projects, is set to rise by 2.5 per cent to £646m. Additionally, the climate change levy, designed to encourage energy efficiency, is on track to increase by 2.2 per cent to £151.7m. Retail remains one of the UK’s most energy-intensive industries, with electricity meeting 90 per cent of its energy needs.

Dickinson argued that significant cuts to these policy charges would provide retailers with the breathing space needed to invest in keeping household prices down and protecting jobs. The BRC has called on the government to address a range of costs, including employment expenses and business rates, at next month’s Budget. This warning comes amid broader industry concerns, with John Lewis cautioning against a business rates raid and the Co-op attributing recent job cuts to Labour’s national insurance increases.