Response to Labour's statement on protecting small businesses from high energy prices

Press release
Publication date
Industry sector
Supply and Retail Market

Ofgem has taken significant action to protect small businesses. Ofgem brought in major reforms last year to help small businesses get more out of the energy market and the Federation of Small Businesses (FSB) and other business groups have acknowledged Ofgem’s work.

A report for the FSB recently stated that Ofgem ‘has given considerable focus to this area in recent years, and has increased the protections available to micro businesses as consumers (as well as extending the definition of micro businesses it uses)’.”

Ofgem’s objective of protecting consumers already includes small businesses and our reforms include:

  • Introducing enforceable standards of conduct so that suppliers must treat Britain’s smallest businesses fairly on billing, switching supplier and contracting with them. These standards are backed up by Ofgem’s ability to impose fines if necessary, and we made clear yesterday that the level of penalties we impose from now on will be likely to be substantially higher if we find companies have broken the rules.
  • Requirements for suppliers to provide much clearer information to small businesses on their contracts, so that they know when they can shop around for cheaper deals. This includes an obligation for suppliers to put the contract end date on all bills from the end of March 2014.

Ofgem also successfully made a case to Government last year for powers to clamp down on ‘rogue’ brokers and other organisations that are marketing energy products or services to business customers in a misleading way. Government confirmed that Ofgem can enforce the Business Protection against Misleading Marketing Regulations in November 2013. Ofgem is also developing a code of practice for tougher regulation of brokers and other intermediaries that market deals to businesses. We are currently consulting on the appropriate regulatory framework for this code and plan to have the final proposals in place by end of 2014.

Back-billing

Back billing happens when suppliers do not bill a customer for some time, only to later issue a bill for energy that has been used, but not previously billed. Ofgem took the lead in pushing suppliers to cut back-billing for Britain’s smallest businesses to one year, where the supplier is at fault. As a result, Eon and SSE have already limited back-billing for Britain’s smallest businesses to one year. And last year British Gas, EDF Energy, Npower, Scottish Power, First Utility, Good Energy, and Opus pledged to limit back billing to one year by the end of 2013, or as soon as is practicably possible in 2014.

Automatic rollover of contracts for small businesses

The Big Six suppliers are stopping auto-rollover contracts with termination fees for small businesses in 2014. But we are taking further action to help businesses understand their choices in this area, so they know that negotiating new contracts could enable them to reduce their energy bills.

Tariff information

We have already acted to ensure that small businesses get better tariff information and we continue to engage with the FSB and others on what more might be needed to make it as easy as possible for SMEs to find the best deal for them.

For further press information contact:

Chris Lock: 020 7901 7225
Howard Rhoades: 0203 263 9629