Business Cost Consultants

Ofgem proposals to protect UK businesses

Blog post   •   Nov 22, 2011 16:22 GMT

As was reported earlier in the week, Ofgem have announced proposals to reform the energy market to help UK businesses change their energy supplier more easily.

CLEARER INFO FOR BUSINESSES NEEDED

Research conducted by Ofgem has highlighted that many UK businesses are being prevented from switching because of a high number of objections from suppliers. Many UK businesses are automatically rolled on to fixed term contracts without their permission. This, coupled with the steep rises in energy costs, can have a detrimental impact on any business.

Ofgem wants UK businesses to get clearer information about contract end dates and renewal options available to them, and so have set out new standards of conduct with financial penalties attached for suppliers that don't adhere to them.

ENERGY BROKERS

In addition, Ofgem has found that many businesses feel they are being mis-sold to by energy brokers and plans to ask the UK government for new powers to take enforcement action directly against brokers that mislead businesses.

Brokers do have a conflict of interests as they work on a commission basis payable from energy suppliers but they also are trying to achieve cheaper rates, whereas independent utility consultants don’t receive any commission from suppliers. Consultants are simply aiming to achieve the cheapest price possible and more often than not will be paid out of the savings achieved.

THE FOUR WAVES OF THE REFORM

According to Ofgem, this is the second wave of four. Last month we seen the first with Ofgem announcing proposals for a simpler and more competitive energy market for householders. Now we see proposals to protect businesses. The third phase will be Ofgem’s liquidity measures to break the "stranglehold" of Britain's six dominant energy suppliers. Lastly, the findings of an independent report on how energy company accounts can be more transparent are due in the New Year.

We are pleased that Ofgem is taking steps to make life simpler for end users. We estimate that over 80% of businesses are paying too much for their energy. Even the best energy managers just don’t have the time, resources and/or contacts to ensure that they are getting the best deals. Do you feel that your supplier is bamboozling you with jargon and have you ever had a contract roll over without knowing? Share your experience with others. For more info on getting the best deals see: Keys to successful energy purchasing 6 ways to reduce energy costs BCC

A factsheet “Protecting businesses” setting out the proposals in more detail is available from the Ofgem website.