Many more small businesses can expect to benefit from a fairer energy market this summer after Ofgem revealed plans to introduce new enforceable standards and extend its definition of ‘mico-businesses.’
Suppliers will be required to treat their small business customers in a more “honest, transparent and professional” way when billing, contracting and switching them, and could face steep fines for breaches, the energy regulator has confirmed.
The new rules include a requirement for suppliers to add contract end dates to bills so that small businesses know when they can start to compare the market.
Small businesses will also be given much longer to tell their supplier that they want to switch at the end of their deal, a move which Ofgem hopes will reduce the number that are unwittingly rolled over onto new contracts.
Suppliers will also have to act promptly to put things right when they have made a mistake, for example wrongly stopping a business from switching.
A greater number of small business customers will be protected by the new rules after the consumption cap was raised to 293,000kWh in gas and 100,000kWh in electricity, equating to about £10,000 spend on each fuel.
“Businesses told us they want more protection and clearer information on contracts and bills. Our proposed reforms and protection measures will ensure this happens - by making it far easier for them to engage in the market,” Andrew Wright, Ofgem’s senior partner for markets, said.
The reforms support action Ofgem is already taking on clearer contracts, back-billing and on new powers to tackle misselling to businesses.
Nine suppliers including British Gas and npower have already pledged to limit back-billing for small businesses to one year, from no later than 2014.
Going forward Ofgem will also review whether or not automatic rollover of contracts for businesses should be banned altogether.
The Association of Convenience Stores (ACS) said the new rules represented a victory for small shops.
ACS chief executive James Lowman said: “Today’s announcement is a welcome step forward for our members. The extension of legal protections to more independent convenience store operators is a hard won concession and the new rules on transparency and switching will make a difference for retailers.
“We will continue to work with Ofgem to deliver a regulatory framework that makes the energy market fairer and reduces costs on everyday entrepreneurs,” he added.