Why Ofgem is failing small businesses
This open letter to Ofgem by James Constant, Director of uswitchforbusiness.com, reveals why Ofgem’s recent review of gas and electricity providers has left small businesses in the cold.
Now that energy regulator, Ofgem, has got tough on behalf of consumers it’s time that it did the same for Britain’s small businesses.
In its Retail Market Review (published 21/3/2011) Ofgem admits that the steps it put in place in 2010 to help micro businesses escape the pitfalls of poor quality contracting practices in the UK energy market have been insufficient, inadequate and all too easily circumvented. The fact is that these steps were never enough to overcome the ingrained problems that have long existed and Ofgem simply ignored the wider SME market altogether.
It is often trumpeted that the UK stands as a testament to deregulation of EU energy markets and even in the last 24 hours we have heard commentators excitedly promoting the veneer of competition.
The reality is however that all too many business energy customers are rolled onto new contracts with an almost total lack of visibility and transparency. Some 70% of the business energy market regularly remains with the incumbent supplier, being unable to afford the time or simply unaware that they have the power to switch supplier and the ability to save significant sums of money in these challenging economic times. We need to make the life of businesses simpler not more complicated.
Ofgem’s contention that it would ‘prefer to implement reform wherever appropriate with the cooperation of the supply companies’ cannot be read without a hint of irony. The market has been crying out for a firm hand by the regulator, who in the first instance should be prepared to hold suppliers to account against their supply licence conditions.
As a priority, Ofgem now needs to ensure:
- Transparency of contract terms including Contract End Dates being printed on every customer bill
- Complete freedom of movement at the end of the agreed contract term without contrived termination windows
- An end to the re-sell tactics of incumbent suppliers which often prevent a customer leaving even though they have a legally binding contract in place with a new supplier.
More needs to be done by Ofgem, suppliers and third party intermediaries to create a genuine market with the customer in control. But British business owners also have a role to play in not allowing themselves to be manipulated and by exercising their rights to save money.
Only then can we collectively deliver a market we can genuinely hold up as an example to the rest of Europe. More importantly, our businesses will have a market where they are not treated shabbily simply because they have more pressing concerns than trying to get through the minefield of business energy switching.
James Constant, Director, uSwitchforbusiness.com
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