LONDON - Price comparison service, Make It Cheaper, is urging small businesses to add their voice to its concerns over the changes being proposed by Ofgem in an attempt to make business energy ( www.makeitcheaper.com/business-electricity.aspx) contracts fairer.
The changes, which are the result of Ofgem’s 18 month industry ‘Probe’, are due to come into force on 1st January 2010 but objections must be made before 15th September 2009. According to Make It Cheaper, they do not go far enough and will create more confusion in the market because they:
- fail to properly address ‘rollover’ contracts (which automatically renew without a signature) - waste a rare and perfect opportunity to standardise all the suppliers’ Terms & Conditions - do not apply retrospectively so will only relate to business contracts fixed from 2010
In Ofgem’s own words, the measures “…would not entirely eliminate the risk of potential consumer detriment as a result of the automatic contract rollover.” *
FACT(1) Only 20% of businesses know when their energy contracts are due for renewal
FACT(2) 95% of small businesses have their energy contracts automatically rolled
FACT(3) Rollover rates for electricity are up to 7p/unit higher than new customer rates
FACT(4) The average electricity consumption of SMEs is 32,000 units (kWhs)
Jonathan Elliott, managing director of Make It Cheaper, commented: “The core issue is not the existence of rollover contracts but the way in which Ofgem has allowed business electricity suppliers to use them. If the contract terms relating to the renewal process were simplified, standardised across all suppliers and applied to every existing contract, businesses would have a much better chance of knowing where they stood.”
Audrey Gallacher, Consumer Focus, added: “Thousands of small businesses are forced to pay over the odds for their energy because of unfair contract terms and conditions. Small businesses should come forward with their concerns while the debate is open, or risk having to pay the price.”
Objections can be sent to energysupplymarketsp@ofgem.gov.uk. A template letter can be found below or cut-and-paste from www.makeitcheaper.com/business-energy-news/business-electricity-news/1 9346037-last-chance-for-smes-to-voice-energy-concerns
(Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser’s URL address field. Remove the space if one exists.)
—————
Dear Ofgem
As a small business, I would like to see the following proposals come into force.
1. Standardised Terms & Conditions across all suppliers for every business energy contract. To avoid confusion, these common T&Cs should apply retrospectively to all current contracts as well as those entered into in future.
2. Notification on each bill of how long a contract has left to run and a clear reminder of the termination process.
3. Renewal offer letters to be sent by Recorded Delivery - always at 90 days before the contract ends.
4. The termination window for every contract to remain open until 30 days before the contract ends.
Yours faithfully
——————
* www.ofgem.gov.uk/Markets/RetMkts/ensuppro/Documents1/Retail%20 package%20-%20decision%20document.pdf (5.8, page 30)
(Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser’s URL address field. Remove the space if one exists.)
(1) Independent research conducted among 1,000 UK small businesses on behalf of E4B in 2008
(2) BGB Annual Report www.centrica.com/files/reports/2006ar/index.asp?pageid=50
(3/4) Data collected from 100,000 companies contacting Make It Cheaper in the past 12 months
Source: Make It Cheaper
Nick Heath: +44(0)20-7654-0730 / +44(0)7720-297972, nick at inkpr.com
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