Procurement · 15 December 2016

New energy industry rules work in favour of micro businesses

energy bill
Micro businesses have been paying around £180m a year more in energy bills than they should be

The Competition and Markets Authority (CMA) has finalised plans to help thousands of micro business owners suffering from overpriced energy tariffs get better deals.

The government-led competition watchdog is introducing measures that will require UK energy suppliers to provide Ofgem, the energy industry regulator, with relevant information that will help consumers get a better deal.

New rules will see Ofgem make certain consumer information available to competing energy suppliers so they can offer more affordable deals directly to consumers, based on their actual energy use. Consumers will be made aware of cheaper deals in writing, and will be able to opt out of any new tariff or scheme whenever they want.

The new measures follow a CMA report from June this year which found that micro businesses have been paying around £180m a year more in bills than they would in a more competitive energy market. Roughly 45 per cent of all UK micro businesses were found to be stuck on expensive “default” tariffs.

Commenting on the rule changes, chairman of the Energy Market Investigation, Roger Witcomb, said: “We’re helping small business owners see which prices are available to them and ensuring they can’t be locked into more expensive contracts.

“We know there are much cheaper deals out there and this will bring them directly to those customers, to make it as easy as possible for them to switch and save money.”

At present, many energy providers automatically put micro businesses onto more expensive “rollover” contracts, when their original tariff ends. The CMA has concluded that from 2017, energy providers will be required to stop using high exit fees to lock owners of micro firms out of switching to cheaper tariffs.

“We believe these changes will see customers benefitting from better deals in a more competitive market,” added Witcomb. “We’ve finished putting in place those changes we’re ordering in the [energy] market, and there are over 30 measures resulting from our report which will help it work better from top to bottom.”

All information published in relation to the investigation is available on the energy market investigation case page.

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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