By Reemesh Patel
SK Energy
OFGEM will launch a review of the microbusiness energy market this year. The regulator will examine whether to put in place similar protections for the UK’s smallest firms to those afforded to households.
The review, should it lead to action, will be welcomed by those that have long called for oversight of third parties.
Many suppliers and brokers can reduce energy bills – particularly for the roughly one in four small businesses on expensive rollover contracts. Brokers can package up demand and get better deals for businesses, earning a commission or adding a percentage per kilowatt consumed in return.
But it is not clear that commissions or ‘uplifts’ are always disclosed and small businesses as a whole are being overcharged. The Competition & Markets Authority thinks they are overpaying by £500m a year, with suppliers making four times the margin on small firms than they do on large customers.
Because brokers are not regulated, businesses currently have little protection from bad actors. Many, particularly those setting up shop or taking on new premises, may be bombarded by calls from brokers. More than a fifth of small firms recalled receiving at least 50 calls according to research carried out for Ofgem in 2017.
Small firms may know very little about the energy market. If an unscrupulous sales agent tells them they are on ’emergency rates’ or that ‘National Grid will shut off their supply’ they can be pressured to sign up to expensive tariffs and locked into long-term contracts. Trust me when I say we have seen some real horror stories and scare tactics used by some unscrupulous brokers of late.
Firms can take complaints to the ombudsman if they think they have been unfairly treated. But should the ombudsmen fail to uphold their complaint, they have little recourse.
In the worst cases, businesses can find themselves paying thousands of pounds to exit contracts. Some end up shutting down as a result.
Ofgem now has the opportunity to take action following an indication from government last year that it may beef-up consumer protection.
“This year, we will be conducting a strategic review of the microbusiness retail market to understand market challenges and consumer experience. The review will identify the case for short and medium-term actions.”
According to Ofgem: A non-domestic consumer is defined as a microbusiness if they meet one of the following criteria:
* Employs fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than ?2 million, or
* Consumes not more than 100,000 kWh of electricity per year, or
* Consumes not more than 293,000 kWh of gas per year.
Do it the SK Way
* At SK Energy we have an award winning team of specialists who can handle the entire process for you, we are experts in the field and know where to look to find the most current tariffs, at the best rates, which are perfectly suited to your business’s needs including offers that you will not find anywhere else. SK Energy hold direct relationships with energy suppliers and provide you with dedicated account management which is unrivalled for both SME and Corporate clients a like. SK Energy have saved businesses over £1.5m off their energy costs in the last 18 months alone.
* Why not get in touch for a free no obligation energy and water health check for your business and see energy done another way – The SK way.