ACS has responded to a consultation from energy regulator Ofgem, reiterating its calls for reform in the small business energy market.
The consultation looks specifically at the introduction of a 14 day cooling off period for microbusinesses to bring their protections in line with that of consumers, as well as an alternative dispute resolution process when there are issues between a business and their supplier or broker.
As part of a long running series of consultations, Ofgem is planning to reform the small business energy market by implementing several changes to licence conditions for brokers and suppliers, including:
- Strengthening the existing rules around the provision of principle contract terms to ensure consumers receive key information both pre and post contract agreement.
- Introducing the requirement for suppliers to only work with brokers who are signed up to a qualifying dispute resolution scheme.
- Introduction of a 14-day cooling-off period for microbusiness contracts.
- Working in collaboration with Citizens Advice to develop and create new information assets for microbusinesses to ensure they have up-to-date guidance and advice as well as wider communications to boost consumer awareness on the market and consumer rights
ACS chief executive James Lowman said: “We have long called for reforms to the energy market to bring the protections of microbusinesses in line with those of consumers. We urge Ofgem to implement these reforms to the microbusiness energy market as soon as possible to give the smallest businesses the protections they need when dealing with energy companies and brokers, and allow them to focus on making their businesses more energy efficient instead of spending hours on end dealing with the fallout of unfair contract terms.”
Retailers and consumer groups like Citizens Advice have repeatedly raised concerns with Ofgem about the risk of businesses falling into exorbitant out-of-contract rates through no fault of their own as part of delays to the switching process, and an overall lack of transparency in the third party intermediary (energy broker) market.
Ofgem’s definition of a microbusiness requires a business to meet one of the following criteria:
- Fewer than 10 FTE employees and an annual turnover of less than €2 million
- Annual electricity consumption of less than 100,000 kWh, or
- Annual gas consumption of less than 293,000 kWh
A store with energy costs of around £10,000 a year each for gas and electricity will typically fall into the category of microbusiness.
