Shapps intervention urged to stop energy suppliers ‘finding routes to inflate’ bills for SMEs
The business minister has been asked to intervene to stop energy suppliers from hiking prices for small businesses.
Some small firms have complained that their energy costs continue to climb, despite the government’s energy bill relief scheme.
The Federation of Small Businesses (FSB) has written to Grant Shapps to urge him to prevent suppliers from “finding routes to inflate prices.”
The industry group slammed a “lack of responsiveness” from the country’s big six suppliers, after asking them in September to freeze standing charges and to not disconnect small businesses during the tough winter ahead.
It has also called on suppliers to not to ask struggling small business customers for unreasonable upfront payments.
While the government’s six-month energy aid package means energy usage charges are capped at a certain amount for businesses, the FSB told Shapps its members were concerned over “the implementation of the scheme and apparent lack of communication from suppliers is causing some concerns.”
The industry body said that a September letter to the UK’s energy titans – Centrica, EDF, E.ON, Octopus, Ovo, and Scottish Power – only received a holding response from Scottish Power, with no responses at all from other firms.
However, Ovo highlighted that it does not supply any business customers.
Many small businesses had “come to us puzzled that their bills remain sky-high,” following the government’s energy support scheme, FSB policy and advocacy chair Tina McKenzie said.
Businesses were “confused about how the discounts are being applied and worried about whether they could still stay open by Christmas and need to let their staff go,” in contrast to what the scheme had been hoped to achieve, she added.
McKenzie called for “more transparency and support” over the aid package, as well as for the government to tackle suppliers continuing to charge high bills.
“It’s utterly unacceptable for energy suppliers to ask cash-strapped small firms to cough up a large sum of deposit in advance of having any turnover or profit that can fund their energy use,” she said.
EnergyUK, the trade group for the energy sector, said it was “engaging with trade associations and members” on how to support businesses when government support expires in April next year.
As wholesale gas prices continue to be “extremely volatile,” this means that business’s energy costs, particularly for firms coming to the end of fixed contracts, have “inevitably risen sharply,” the EnergyUK spokesperson added.
Uncertainty over future prices “makes offering new fixed rate contracts very difficult” and suppliers have to “make commercial decisions”, they added.
“If suppliers can’t recoup their costs, then they risk going out of business themselves as 30 did in the domestic retail market last year.”
Hospitality bosses told CityA.M. last week they felt that suppliers were “deliberately profiteering” from the energy crisis by continuing to whack pubs and restaurants with eye-watering costs.
Ofgem was aware that “some businesses are having problems in getting fixed rate energy deals and also that some are being asked to pay large deposits by some suppliers,” a spokesperson confirmed to CityA.M.
Businesses are facing a cocktail of rampant costs this winter, with margins under pressure all while consumers themselves are feeling the pinch.
The department for business, energy and industrial strategy (BEIS) reiterated its previous comments that it was working with energy regulator Ofgem to confirm “licence conditions have not been breached and to ensure businesses are able to see the full effects of support offered by the scheme.”
The department also stated that “a small minority” of businesses had reported some suppliers had set prices that “undermine the benefits” of government aid.