Small store owners could be paying much more than they should for their energy bills, early evidence from a competition inquiry suggests.
The Competition and Markets Authority (CMA) has been investigating the energy market since last summer.
In its updated Issues Statement published today, the CMA highlighted the lack of transparency and engagement between energy suppliers and microbusinesses - a non-domestic consumer that employs fewer than 10 people and has an annual turnover of no more than €2 million - as a key concern which needed further investigation.
Prices for business consumers were less transparent than for domestic customers, a fact which could hinder microbusinesses from switching suppliers, it said.
“As most energy contracts are negotiated and energy prices are generally not published, this may limit transparency in the non-domestic market,” the report said.
“A lack of engagement can result in businesses being put on tariffs which are not necessarily the best deal for them and or that the lack of engagement and transparency weakens competition for these customers and results in generally higher prices for microbusinesses,” it added.
The CMA also plans to make further investigations into the use of damaging rollover contracts and even pricier variable products. “Rollover prices are typically higher than negotiated prices, and deemed and out-of-contract prices are generally higher than the prices of negotiated contracts and rollover contracts,” it said.
“We note that five out of the six large energy firms have withdrawn auto-rollover fixed-term products and may now be placing customers on variable products with shorter notice periods.
”However, the evidence we have seen suggests that these may be considerably more expensive than some acquisition and retention products and if so, we will want to understand the reasons for this,” it added.
The CMA also said that there was a “general lack of data on the microbusiness segment” and that the definitions of SMEs used by the six large energy firms “varied considerably” and differed from the Ofgem definition.
As a result it would also attempt to construct a more robust evidence base, particularly on pricing, in the next phase of its investigation.
The CMA is likely to publish final decisions by the end of 2015.