By Daniel Hunter
The energy regulator Ofgem has today (Thursday) announced a series of measures offering greater protection for households in the energy market — leading the Federation of Small Businesses to call for similar protection for struggling small firms.
Under the plans energy suppliers will be forced to review the tariffs they offer domestic customers, including restricting the number they provide to four per fuel type and providing information about the cheapest deals available, even if they are from a competitor. Suppliers which treat customers unfairly will face fines under the new rules.
The FSB is arguing that small firms, which often struggle to switch suppliers as a result of ‘rollover’ contracts imposed with little or no notice, tying them in to unfair contract terms, are also significant energy users and so should be offered the same protection as domestic customers.
FSB research has found that one in four small firms had been rolled over without their knowledge and an overwhelming 82 per cent of respondents said they would support the abolition of rollovers.
John Allan, Chairman of FSB Merseyside, West Cheshire and Wigan said: “Small businesses are important energy consumers and so should be offered the same protection from suppliers as domestic customers are receiving.
“When we talk about small business finance mounting overheads, such as energy costs, are often overlooked but keeping costs down is central to maintaining a healthy cash flow.
“It is essential that businesses can proactively control these costs by switching suppliers to better deals, but certain practices, particularly imposing rollover contracts, leave them with inflated bills and little room to do anything about them.
“The best advice for small business owners is always to shop around for a better deal, but Ofgem has to put in place the same protective measures as for domestic customers to allow them to shop around the energy market.”
The FSB is supporting the Micro Business and Energy Contract Rollover Private Members’ Bill, tabled by Caroline Lucas MP, which had its second reading in the House of Commons on Friday, 25 January 2013.
The Bill aims to tackle rollover contracts and the practise of locking small firms into un-negotiated and often more expensive terms for a full 12 months. If passed it would limit this to 30 days, helping to deliver a fairer energy market for micro businesses.
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