Business group calls for energy watchdog

The UK’s leading energy price comparison and switching service for businesses has joined calls for a watchdog to be appointed to police Ofgem’s shake-up of the smallbusiness energy market.

The Energy Advice Line has supported calls by the Forum of Private Business for a business energy watchdog to be established to ensure that the reforms proposed by the regulator are enforced.

Ofgem’s proposals are aimed at improving supplier behaviour towards business energy users and include placing new standards of conduct into suppliers’ licences, with financial penalties for breaches.

The regulator has also proposed an official accreditation scheme and a Code of Practice governing energy brokers, as well as powers to take action against brokers for misleading marketing.

Managing director of the Energy Advice Line, Julian Morgan, said he welcomed Ofgem’s initiatives but said they would only be effective if they had “teeth”.

“There is no point launching a Code of Practice unless it is referred to in the actual supply licence as a stipulation for suppliers to adhere to, and unless that Code is policed by a body with powers to enforce the guidelines,” Mr Morgan said.

The Forum of Private Business has warned that Ofgem’s proposals could be undermined due to lack of an enforcement body, pointing out that consumer watchdog Consumer Focus is due to be disbanded in 2013, with some of its functions passed to the Citizens’ Advice Bureau (CAB).

“Consumer Focus would have been the most sensible option as the watchdog, as long as it was given powers by Ofgem or the government to enforce the Code of Practice on both brokers and suppliers,” Mr Morgan said.

“But with Consumer Focus non-existent after 2013, Ofgem needs to consider which body will enforce these new guidelines.”

The Forum recently released research showing 94% of small businesses had seen their business energy bills rise over the past year – the biggest single cost increase they had experienced.

“We can only hope that, if established, Ofgem’s proposed accreditation scheme for Codes of Practice would work effectively, and financial penalties would be a big enough deterrent. But there is a risk that the small business energy market will not be adequately policed,” said the Forum’s Senior Policy Adviser Alex Jackman.

“Ofgem clearly recognises our members’ concerns that the behaviour of energy companies towards their small business customers is all too often unfair and unjust, so these proposed reforms are certainly welcome, particularly addressing mis-selling and extending the protections against rollover contracts enjoyed by micro businesses to all SMEs.

“But we are concerned that the imminent demise of Consumer Focus, following the closure of its predecessor Energywatch, could leave small firms without a dedicated watchdog,” he said.

The Forum’s recent quarterly ‘Referendum’ survey showed that rising energy prices are the biggest cost increases seen by firms over the past 12 months, followed by transport (92%) and the price of raw materials (82%).

The Energy Advice Line is the UK’s leading business energy price comparison and switching services, and enables firms to compare the market for the best possible business energy deals at the touch of a button.

The service has a team of business experts who can give advice about business energy contracts and how to avoid expensive contract rollovers. For further information visit www.energyadviceline.org.uk