Ofgem have published their annual report, “Micro and Small Business Engagement in Energy Markets”, examining how businesses across England, Wales and Scotland engage in the energy market.
The report found that satisfaction with the renegotiation or extension process is high, but that the 10% who say they are dissatisfied with the process highlight price increases, poor communication and renewing without the businesses knowledge.
Ofgem also found that on average, businesses spend approximately £4,000 a year (including VAT) on mains electricity, which accounts for 14% of all operating costs. The average spend on mains gas is lower at just under £3,000 (inc. VAT) and represents 11% of overall costs on average.
Of the 95% of businesses who recalled receiving a bill in the last 12 months, 70% did not recall seeing a contract end date or a date they need to give notice by.
Other key findings from the report include:
- Recent switchers and those who have recently shopped around are more likely to take notice of contract renewal letters and contract documents. These documents may be triggers for switching and shopping around or they may be part of the information gathering process.
- There has been a shift away from extending/rolling-over contracts towards negotiating new contracts with existing suppliers this year. The propensity to negotiate a new contract with an existing supplier is particularly evident among businesses with higher than average energy expenditure.
- There has been an improvement in ratings of suppliers since 2014, but there is still a relatively high level of distrust in suppliers’ propensity to treat businesses fairly.
- Views on brokers remain overwhelmingly negative across all businesses. However, businesses that use brokers are much more likely to be positive about them.
ACS chief executive, James Lowman, said: “This report further demonstrates the need for better communication between energy suppliers and small businesses.”
“Small businesses should have the same protections as household consumers when dealing with energy suppliers. We look forward to the final CMA remedies in this area, which are due this summer.”
The full Ofgem report can be found here: https://www.ofgem.gov.uk/system/files/docs/2016/05/microsurvey_final.pdf
