October 17, 2017
Price Cap on energy bills? Not for 5 million UK SMEs
A price cap on energy bills has been proposed by the Prime Minister, Theresa May. This is a welcome relief for many domestic customers stuck on expensive standard variable rate (SVR) tariffs, but little thought has been given to the five million small to medium businesses who aren't protected in the same way.
UK SMEs are the backbone of the British economy and last year's Competition and Markets Authority (CMA) highlighted the profit margin for selling electricity to small businesses is higher than to domestic customers (8% vs 3%) and that the SME gas sales generated a 10% profit.
In the last 3 months, wholesale electricity prices (one of the main drivers of tariff pricing for business contracts) have risen by 15%. The report by the CMA last year also highlighted that artificially high prices have allowed the "Big Six" energy suppliers to overcharge SMEs by £500m a year.
Just like domestic customers, small businesses are rolled onto products similar to SVR tariffs at the end of their fixed price deals and shockingly, in some cases, these tariffs can be between 50 - 100% higher than acquisition prices.
Currently, the business energy market isn't as regulated as the domestic and until the recommendations from the CMA report have been fully put in place, it will remain this way. However, recent changes to the industry mean that all business energy suppliers MUST make their current out of contract rates available on their websites.
The only way to stop your business being rolled over onto an unnecessarily expensive contract is by comparing what energy price plans are available for your business when you enter the last 120 days of your current contract. Once you find a supplier and price plan that you are happy with then you need to let your current supplier know in writing that you will be moving at the end of your current contract.
Energylinx for Business offers an impartial comparison and switching service. We compare over 30 energy suppliers so you can be sure you will find the right one for your business. You can arrange a transfer online or by calling 01259 225400.
Posted on October 17, 2017 at 03:40 PM