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Are the smallest firms getting a fair deal on energy?

Are the smallest firms getting a fair deal on energy?

Are the smallest firms getting a fair deal on energy?

Energy bills are a significant overhead for businesses of all sizes, so it's important for companies to ensure they are doing everything they can to manage costs.

Keeping expenses down requires an inward focus - on issues such as energy consumption and efficiency - but it also depends on commercial customers being able to find and secure the best possible deal from providers.

In a recent survey by Censuswide, commissioned by independent power supplier Utilita, 502 micro-businesses based in 12 regions across the UK were asked about their energy deals and their relationships with providers.

More than four out of ten respondents (42 per cent) felt they had received an unfair or very unfair deal from their current energy company.

Seven out of ten (71 per cent) had been caught out by unexpected terms or conditions such as high rates, inflexible payment terms or extended contracts.

Nearly a third (31 per cent) of the micro-businesses surveyed said they were put on an expensive tariff because they were viewed as a credit risk, while one-fifth (21 per cent) had been rejected outright when applying for an energy deal.

More than four out of ten firms (45 per cent) reported having to pay a large upfront deposit to secure their energy supply.

On average, energy costs for the businesses taking part in the study were £215 higher than a year ago.

Respondents revealed that they have taken various actions to keep their bills down, the most common of which are keeping the heating (39 per cent) or lights (37 per cent) switched off, followed by the more serious decisions of reducing staff (12 per cent) or cutting opening hours (11 per cent).

Is stronger action required?

With some firms having to make big decisions just to ensure their bills are manageable, is it time some serious changes were made in the energy sector to guarantee fairness and affordability, particularly for the smallest companies?

Shaun Underwood, director of Utilita Business Energy, said: "We understand that many small businesses are time-poor and can find securing a fair energy deal challenging as they often face cash flow problems. More needs to be done by the UK energy sector to provide these businesses - the backbone of Britain's economy - with a fairer and easier solution."

In July 2017, the government announced a plan to "upgrade the energy system" and give homes and businesses more control over their consumption and costs.

The Department for Business, Energy and Industrial Strategy pointed out that new technologies are emerging to improve energy storage and management. This will help customers to access renewable energy, which is coming down in cost and making a rising contribution to electricity generation.

Technologies such as smart meters are also helping consumers to track their power consumption and possibly earn financial rewards by returning unused energy to the grid.

Andrew Wright, senior partner for energy systems at industry regulator Ofgem, said: "We want to open the door to new technologies and services so that they can help to reduce bills for consumers in the long term. It is vital that we get the changes in place as there is potential for a smarter system to save consumers billions between now and 2050."

 

Posted by Julie Tucker

Image courtesy of iStock/schulzie