Energy industry regulator Ofgem has angered retailers with its decision to allow power suppliers to continue to impose 'rollover' contracts on small businesses.

Ofgem announced earlier this year that it would recomend banning clauses which tie customers into an extended contract at a higher tariff, a practice exposed in Convenience Store's Fight the Power campaign.

However the regulator has now said it will allow energy companies to participate in contract rolling for up to a year.

ACS (Association of Convenience Stores) chief executive James Lowman said: “Rolling contracts frequently lock small and medium businesses into damaging terms of supply for long periods. Instead of this softening of proposals, we call for more robust action, including extending the remit of this proposal to all SME businesses, not just micro businesses."

Energy companies argue that stopping rolling contracts will lead to out of contract customers receiving bad terms of supply. But Lowman said that in a “malfunctioning” market place, customers were already facing price hikes and poor terms.

“We want businesses to be given more flexibility and encouragement to switch energy companies if they find themselves in this situation. If energy companies have competitive deals and good practice then there will be no problem,” he added.

“If Ofgem cannot take decisive action then this important matter should be referred to the Competition Commission.”

ACS is to respond to Ofgem's call for consultation on the proposal. A pro-forma letter, urging the regulator to give c-stores a fairer deal from power suppliers, can be downloaded at www.acs.org.uk.

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