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Small businesses call for dedicated utilities watchdog

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Small businesses suffering at the hands of utilities companies believe a dedicated watchdog should be restored to ensure they receive an efficient, cost-effective service, new research carried out by the FPB suggests. The FPB believes that Consumer Focus, which was set up in September 2008 when Energywatch merged with the National Consumer Council and Postwatch, should offer to small businesses the same protection it does to domestic customers.

According to the FPB's survey of 1,700 small businesses, published today, almost three-quarters of respondents (74%) claimed to have experienced problems with one or more of their utilities suppliers. These problems have worsened during the past six months for 59% of the small businesses surveyed, with 86% of those firms expecting them to deteriorate further. In all, 60% of respondents called for a dedicated watchdog to mediate between small businesses and utilities providers.

Business owners cite poor procedures such as roll-over contracts which tie businesses into often unfavourable deals with utilities providers, the uncompetitive market for utilities, a lack of confidence in regulators such as Ofwat and Ofgem, and doubts about the credibility of the complaints appeals process. The FPB is concerned that business owners are not afforded the same protection as domestic customers, who benefit, for example, from a one-year limit on the period for which a utilities provider can back-date a bill.

"Consumer Direct, the energy ombudsman, and Consumer Focus appear to be following guidelines that are not in the best interests of customers," said the FPB's adviser on utilities, Colin Beake, Managing Director of Utility Options. "It's about time that the whole thing was overhauled to give small businesses better protection."

He added: "Businesses should be sure of their contractual agreements, be aware of when their contracts ends, and be sure to cancel their agreements in due time to allow them to locate the best prices when the contracts end."

Consumer Direct, which is a new complaints handling system, has been introduced to deal with the UK's smallest companies – those with 10 employees or fewer, a turnover not exceeding £1.6 million and with an annual electricity consumption of not more than 55,000 KWh (or gas of not more than 200,000 KWh).

However, the FPB is concerned that many small firms fall outside of this criteria and will therefore not be protected. Unlike Energywatch, Consumer Focus does not investigate complaints made by businesses unless their supply has been cut off and they are deemed to be ‘vulnerable' customers.

As part of Ofgem's new ‘complaints handling standards', businesses are expected to first complain directly to their energy companies, rather than Consumer Focus. Then, if the complaint is passed onto the energy ombudsman, the maximum compensation available is just £5,000.

The main problem faced by small businesses is ‘unjustifiably high' energy prices, with 45% of respondents to the FPB's survey citing this as a current issue, and 68% anticipating it will be a future concern. Poor customer service is another major problem (30% current, 23% anticipated), followed by incorrect billing (29%, 25%), difficulties in switching suppliers (22%, 17%), increased prices for water and sewerage (16%, 25%), problems with telecommunications suppliers (12%, 8%), problems with energy suppliers (8%, 11%), the failure of companies to provide a rebate (7%, 6%) and unexpected charges (10%, 7%).

FPB member Julia Barnett owns Barnett Fare, a bakery in Cornwall. The firm's average annual energy bill is around £15,000, but Mrs Barnett has been pursued by E.ON over a backdated bill for more than £40,500. Although her meter was being read correctly, the bills that arrived were too low.

"Initially, it was very difficult to get hold of the same person at E.ON. When I managed it, they were very restrained in what they could do because of the company's internal systems," Mrs Barnett said. "Speaking to someone higher up was virtually impossible, and I had to repeat the same information over and over again to different people."

After months of negotiations, E.ON has offered a 25% reduction and the bill will now be backdated for only six years, which is the maximum time period allowed in law.

"The whole point is that, despite our concerns that they were undercharging us, we were reassured that everything was under control and that our account was OK, only to find that the readings were not being processed correctly by E.ON's computer system."

In August 2007, Kevin Curson, of K J Curson Farms in Norfolk, was retrospectively billed for £134,562.47 for the period from 28 July 2003 to 31 July 2007. He was told by his energy company, EDF Energy, that there had been a meter error. When he refused to pay, Mr Curson was charged an additional £10,000 ‘security fee'.

"We have been paying off £6,000 per month, but I still think we shouldn't be paying anything at all; it's unfair," he said.

Via Utility Options, the FPB helps its members to shop around for a better deal on utilities. For more information, call 0845 130 1722.

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