Energy watchdog must heed all small businesses’ concerns, says FPB

8 September 2009

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With less than a week to go before Ofgem's probe into the energy supply market closes, the FPB is urging the watchdog to review its initial recommendation not to ban costly rollover contracts.

The call follows the FPB's latest research, in which more than 84% of respondents cited utilities costs as a major concern, with almost half (47%) considering them to be a ‘serious' or ‘very serious' issue. The final day for responses to Ofgem's investigation is Tuesday, 15 September.

"Time is running out for Ofgem to take on board how unpopular and damaging rollover contracts can be," said FPB spokesperson Phil McCabe. "Members have told us that they are given extremely inadequate notice periods, with some saying they receive no notice at all. Often, they are then forced to pay much higher rates. This is simply unfair."

He added: "These ‘evergreen' contracts stifle competition within the energy market because they prevent business owners from shopping around for a better deal. Ofgem should help struggling small businesses to control their utility bills, not wilt under pressure from the big energy companies."

In July 2009, the FPB joined the Association of Convenience Stores (ACS) and the Utilities Intermediaries Association (UIA) in condemning Ofgem's u-turn over its earlier plan to outlaw rollover contracts, following pressure from energy companies including E.ON, npower and EDF Energy.

According to research carried out by the ACS, one in five businesses receive inadequate notice that their energy contracts are coming to an end. Further, one in ten have received backdated bills and one in four businesses have been initially offered unfavourable renewal terms.

The FPB and ACS are also concerned that Ofgem's draft recommendations – including introducing specialised contracts, better information and communication services and requiring suppliers to give 30-day notice periods to allow businesses to renegotiate contracts – apply only to micro-businesses (those employing 10 staff or fewer), and not other small business employers.

FPB member Lester Heaven is a Director of AC Fixings in Chelmsford, Essex. The company sells power tools and fixings for the construction industry. Recently, when trying to switch electricity suppliers, he was shocked to find he had been rolled over into a further year on much higher rates.

"When I phoned up I was told I had been given six weeks in which to cancel, but I don't remember seeing any notice telling me the contract was coming to an end," said Mr Heaven. "As far as I was concerned I wasn't under contract, but, when I checked, I had been rolled over into another 12 months and my rates had gone up by almost 50%."

He added: "In the present economic climate I'm looking for any cost saving I can make. However, although I had a better offer on the table, I was unable to take it up. You just feel that you've been conned but there's nothing you can do."

Protection from soaring energy costs is available via the FPB and Utility Options, which can help small businesses to negotiate contracts and shop around for a better deal.

Aside from utilities, the FPB is working with its partners to free small businesses from being tied in to rollover contracts, negotiating a deal with Chess Telecom which enables its members to benefit from no rollover contracts and a guarantee of best price.

For more information, call the FPB on 0845 612 6266, or click www.fpb.org.

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Energy watchdog must heed all small businesses’ concerns, says FPB

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