Ofgem boost for small business utility deals

Unfair automatic roll-over of contracts to end as new proposals offer SMEs more power in the utility market.

By News Desk
23rd March 2009 at 12:45

Ofgem utility proposals will benefit small businessesA clampdown on unreasonable terms and pricing by utility companies announced today by government regulator Ofgem, will be good news for small businesses who have not always been able to get the best deal from gas, electricity, water and other suppliers.

Two of the key changes proposed by Ofgem are putting an end to automatic roll-over when fixed-term utility contracts expire and ensuring that SMEs receive clear and transparent contract terms and conditions.

A recent survey by business price-comparison and switching service Make It Cheaper found that 84% of small businesses were unhappy with their current utility suppliers, but only 14% knew when their existing contract came to an end.

Make It Cheaper managing director, Jonathan Elliott described the end of automatic roll-over as:

… good news for over a million businesses stuck on these type of contracts. Businesses rolled-over are typically charged twice the cheapest rates available (current renewals are at around 15p per unit for electricity compared to the best rates of 8p) but we have seen them at three times higher (worst case recorded = 32p).

The proposals will be set out in April in a consultation document designed to amend the licence conditions under which utility companies operate.

It is anticipated that following consultation, final decisions will be made in July, with implementation in the autumn of 2009.

Alistair Buchanan, Ofgem chief executive said:

All consumers will be given greater power in the market and small businesses in particular will have a stronger hand to play.

[Picture credit: delgaudm licenced from Flickr]

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