Small firms losing out on energy deals

According to the latest figures from the Department of Energy and Climate Change, average electricity prices for small and medium-size firms increased by 15-17% from the third quarter of 2008 to the same period of last year. However, prices increased by only 9-11% for large businesses and by just 5% for the UK’s biggest companies.

In a recent survey carried out by the Forum of Private Business, more than 84% of respondents cited rising utilities costs as ‘a major concern’. In addition, many small firms have contacted the FPB in recent months to report that energy companies have tied them to often expensive ‘roll-over’ contracts with little or no warning. Others reported being handed huge backdated bills
following meter errors.

FPB finance director Nick Palin said: “While the big energy companies always pass on wholesale price increases in full, the same can not be said when prices fall. By refusing to play fair, some utilities giants have forced costs on small businesses that they can ill afford.”

The energy regulator Ofgem is attempting to boost competition by creating transparency in energy-cost forecasts — in order to allow smaller providers to buy in advance — and increasing liquidity in wholesale markets. Following the FPB’s submission to its recent energy market probe, Ofgem announced a series of measures designed to protect small businesses from the actions of energy companies. These measures, which came into force on 18 January, affect the way energy is sold and marketed to small businesses. They include limiting the use of automatic ‘roll-over’ contracts; energy companies must now ensure that their business customers are fully aware of any contract changes and must give them enough time (a minimum of 30 days before the end of their notification period) to switch to another supplier. They also prohibit “unjustified’ price differences between tariffs and payment types, and they give firms more flexibility to switch suppliers.

Members of the FPB can take advantage of a free, independent service from Utility Options, a consultancy that monitors when utilities options are up for renewal and negotiates detailed contracts and service agreements. In addition, Utility Options will ‘shop around’ on behalf of a business to secure the best price possible. For more information, call the FPB on 0845 130 1722 (members) or 0845 612 6266 (non-members).