New plans proposed by energy regulator Ofgem will make it easier for small businesses to shop around for the best gas and electricity deals
The regulator wants energy suppliers to make sure that contract terms are transparent and that bills and statements clearly state when fixed-term contracts are coming to an end, so that small businesses don’t pay for more fuel than they need.
Existing safeguards are already in place for firms with 10 employees or less that spend up to £5,000 a year on electricity and up to £5,000 a year on gas. But Ofgem would like to extend the regulations to cover small businesses that spend up to £10,000 a year on each fuel.
The proposals would affect as many as 150,000 small businesses and they are designed to make it easier for firms to find the best deal when their contract ends. The recommendations will undergo a consultation period, but the regulator is hoping to introduce the reforms next summer. Under the rules, suppliers are expected to send firms a new fixed-term offer a minimum of 60 days before their contract ends. Firms will then have at least 30 days to accept the new offer or inform their supplier that they intend to switch, and if a company fails to respond, the supplier will be permitted to automatically roll over the contract for a maximum period of a year.
Andrew Wright, senior partner, markets, at Ofgem said: “Our retail market review showed that small businesses want fairer treatment from suppliers, clearer information about contracts, and more protection from misselling. Our proposed reforms seek to address these issues. We urge suppliers to show they are committed to restoring the confidence of business consumers by getting behind our proposals.”
Existing safeguards are already in place for firms with 10 employees or less that spend up to £5,000 a year on electricity and up to £5,000 a year on gas.