5 August 2015 09:45
Small firms getting "raw deal" on energy
Most small businesses still don't fully understand their energy bills and many are paying too much because of roll-over contracts and auto-renewal, according to new research.
A poll by SwitchMyBusiness has found that 18% of businesses have been automatically rolled over onto a new contract without their permission and a further 16% don't even know whether they have been a victim of auto-renewal.
The study comes in the wake of the Competition and Markets Authority report which found that UK SMEs are unnecessarily losing £500 million a year on energy.
While Ofgem and some energy suppliers have made steps towards making the business energy market fairer, the practice of auto-renewal - where businesses are "locked in" to another fixed-term contract without their express permission - continues.
The research also showed that 30% of small businesses have been shunted onto what's called a "deemed contract" with the same supplier at the end of a fixed contract, leaving them paying up to 80% more.
Just over 50% of UK SMEs said they had problems understanding their energy contract; and 26% said they did not know how to terminate their contract.
"These findings prove that the UK's SMEs are still getting a raw deal," said Ivan McKeever, CEO of SwitchMyBusiness. "Smaller to medium-sized businesses are in a uniquely challenging position: the business energy market lacks the transparency that consumers now have and smaller businesses do not have the resources to liaise with lots of suppliers and negotiate a good deal."
SwitchMyBusiness is calling on the Government to take urgent action. It wants new legislation to outlaw the practice of auto-renewal. It's also advocating a cap on how much more businesses who are on deemed contracts are charged. According to Ofgem, around 10% of smaller businesses are on deemed contracts at any one time.