Small firms getting "raw deal" on energy

Small firms getting "raw deal" on energyMost small businesses still don't fully understand their energy bills and many are paying too much because of roll-over contracts and auto-renewal, according to new research.

A poll by SwitchMyBusiness has found that 18% of businesses have been automatically rolled over onto a new contract without their permission and a further 16% don't even know whether they have been a victim of auto-renewal.

The study comes in the wake of the Competition and Markets Authority report which found that UK SMEs are unnecessarily losing £500 million a year on energy.

While Ofgem and some energy suppliers have made steps towards making the business energy market fairer, the practice of auto-renewal - where businesses are "locked in" to another fixed-term contract without their express permission - continues.

The research also showed that 30% of small businesses have been shunted onto what's called a "deemed contract" with the same supplier at the end of a fixed contract, leaving them paying up to 80% more.

Just over 50% of UK SMEs said they had problems understanding their energy contract; and 26% said they did not know how to terminate their contract.

"These findings prove that the UK's SMEs are still getting a raw deal," said Ivan McKeever, ceo of SwitchMyBusiness. "Smaller to medium-sized businesses are in a uniquely challenging position: the business energy market lacks the transparency that consumers now have and smaller businesses do not have the resources to liaise with lots of suppliers and negotiate a good deal."

SwitchMyBusiness is calling on the Government to take urgent action. It wants new legislation to outlaw the practice of auto-renewal. It's also advocating a cap on how much more businesses who are on deemed contracts are charged. According to Ofgem, around 10% of smaller businesses are on deemed contracts at any one time.

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via Business Feeds

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