Energy regulator Ofgem has launched a consultation in an effort to make the energy market fairer to small businesses.
Ofgem proposes to improve clarity over the terms and conditions of contracts such as when it is due to end or when the customer can switch supplier. It also hopes to remove the barriers for customers switching supplier.
These safeguards are currently in place for micro businesses, those with 10 or less employees, but Ofgem hopes to extend them to all small businesses. If introduced, over 150,000 more businesses will benefit.
Andrew Wright, Ofgem markets senior partner, said: “Our retail market review showed that small businesses want fairer treatment from suppliers, clearer information about contracts, and more protection from mis-selling. Our proposed reforms seek to address these issues. We urge suppliers to show they are committed to restoring the confidence of business consumers by getting behind our proposals.”
Association of Convenience Stores chief executive James Lowman cautiously welcomed the decision. “This is an important step forward, Ofgem has recognised that basic standards of information and transparency in energy contracts should be afforded to all small businesses not just micro businesses, a key demand of our campaign,” he said.
“However we are concerned that in making this step they have not gone far enough. Crucially the enforcement of these provisions will not include recourse to the Energy Ombudsman for non-micro businesses.”
Lowman was also concerned that the consultation did not cover two major issues facing currently facing independent retailers – backbilling and automatic contract rollover. “Ofgem are clearly aware of the problems in this market and we will continue to work with them to make progress,” he said. “However the pace of change is still too slow. They must take action, especially in the more controversial areas, to promote competition, fairness and support for small businesses.”
The consultation will be open until December 21 and Ofgem hopes to introduce the proposals by summer 2013. Submissions to the consultation can be made here.