Retailers welcome Ofgem’s proposals to tackle unfair business energy market

The Federation of Independent Retailers (the Fed) has welcomed a new consultation from energy regulator Ofgem aimed at holding suppliers to account for overcharging businesses.

The move comes after leading cross sector associations, including the Fed, BIRA and ACS co-signed an open letter to Ofgem from not-for-profit energy consultancy Box Power CIC challenging the energy regulator to take immediate action to protect smaller businesses that are being taken advantage of.

In its consultancy document, Ofgem highlights a number of proposals for changes to the non-domestic energy market to make it fairer for businesses. These include:

• Changing the rules to require timely responses to complaints, widening the standards of conduct rules and access to the Energy Ombudsman beyond just microbusinesses
• Fairer deemed (out of contract) rates to ensure that they are not ‘unduly onerous’
• Transparency on bills so that businesses understand price changes and have clear information about additional charges that are added to their bills as a result of dealing with third party intermediaries (TPIs)
• Expanding TPI dispute resolution facilities beyond microbusinesses to include larger non-domestic customers
• Calling on the government to regulate the TPI market, which is currently not directly covered by Ofgem

The Fed’s National President Muntazir Dipoti said, “Independent convenience retailers are the fabric of society and play a critical role in their communities, but with the cost of doing business soaring, many Fed members are struggling to stay in business.

“Businesses who signed contracts at the peak of the energy prices need more support now. Government help was cut too soon to help these businesses and the energy companies are not doing enough to help through moving to blend and extend contracts or offering early exit from agreements.”

British Independent Retailers Association (BIRA) too has welcomed the announcement by Ofgem for the regulatory changes proposed to address ongoing issues with energy supply to smaller businesses.

Andrew Goodacre, CEO of Bira, emphasised the importance of transparency in energy bills, especially amid recent significant increases in energy costs.

"This report highlights that Ofgem recognise ongoing issues with energy supply to smaller businesses. We support their recommendations especially as earlier this week we called for greater transparency around broker fees for all business customers, as they have done for micro businesses. BIRA wants to see transparency and lower costs for high street businesses, especially with the cost of energy set to stay at high levels in the foreseeable future," he said.

As Ofgem's powers in the non-domestic retail market are more limited than in the domestic sector, BIRA is calling on the government to consider further protections in areas where regulatory power is lacking, such as energy brokers.

ACS chief executive James Lowman said: “We welcome Ofgem’s acknowledgement that the protections afforded to microbusiness customers should be expanded to include more businesses, and support proposals to regulate the TPI market, but this is long overdue. Ofgem have been looking at stronger enforcement against rogue TPIs and wider business protections for a decade, and to date very little progress has been made. We need immediate action to ensure that the energy market is working competitively and fairly for everyone.

“We are pleased that the plight of businesses who signed contracts at the peak of the energy contracts has been acknowledged, but those businesses need more support now. Government help was cut back too far, too soon, and the energy companies are not doing enough to help through moving to blend and extend contracts or offering early exit from agreements.”