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2 Feb

Greater Protection for Small Businesses

by denergi admin

 

This week Ofgem, the governing body for the UK energy markets, announced proposals for greater proection for small businesses against high energy costs. These proposals will “[…]widen the number of small businesses that benefit from its existing safeguards to ensure contract terms are clear”. The extension of these rules would help provide cover to a further 150,000 businesses that “typically spend up to £10,000 a year on each fuel”.

In addition to the expansion of what is classed as a ‘microbusiness’ Ofgem has also proposed “[…]that all bills and statements that small businesses are sent also show clearly when the contract ends[…]”.

It is common practice in the energy industry for accounts to be ‘refreshed’ if they do not hand in termination notice during the correct window before their contract ends. If a customer is ‘refreshed’ then they will be signed in to a new contract for a year on significantly higher rates. For business customers this is an entirely legal practice but by increasing the awareness of smaller businesses to this fact, such as making their contract end date clear on their bills and statements, Ofgem are hoping to reduce the likelihood of this occurring.

As a final push Ofgem is “also planning to clean up the practices of some energy brokers by developing an industry-wide code of practice for them[…]Ofgem is progressing its case for acquiring powers from Government to take enforcement action against broker who mislead business customers”. It is a known problem in the industry that some brokers use high pressure sales tactics as well giving misleading information to maximise the profit they can make.

These are significants steps by Ofgem to create a fairer market for smaller businesses who can suffer greatly from addtional running costs.