Stay vigilant with energy suppliers to ensure small firms are not overpaying, Government urged
The Federation of Small Businesses (FSB) has asked the Government to intervene to stop energy suppliers from finding routes to inflate prices, as small firms continue to struggle with soaring energy bills despite the launch of the Energy Bill Relief Scheme (EBRS).
In its letter to the Business Secretary Grant Shapps, the UK’s largest business group reveals that eye-watering bills are still landing on small businesses with insufficient discount, after the government energy rebate scheme came into effect, while energy suppliers continue to charge those with newly signed contracts at rates substantially higher than previous period.
There are also examples of small firms asked by energy suppliers for disproportionate upfront payments and told that they could be disconnected from energy if they fall into arrears. While energy suppliers have pledged not to disconnect households that fall into arrears this winter, they have promised no such help for struggling small businesses in the same position who can be cut off within 30 days. Some suppliers even refuse to take on business customers from certain sectors out of fear that they might go under this winter.
“Across the UK, small firms await their energy bills with trepidation as well as hope, in the face of harsh economic challenges which have persisted since 2020,” the letter read.
“However, the implementation of the scheme and apparent lack of communication from suppliers is causing some concerns.”
In September, FSB wrote to Chief Executives of six leading energy suppliers – Centrica, EDF, E.ON, Octopus, Ovo, and Scottish Power – to remind them of their of roles in implementing the EBRS, as well as encouraging them to commit to freeze standing charges for small business customers, not to ask for unreasonable upfront payments and not to disconnect vulnerable small firms.
Only one – Scottish Power – responded, but only with a holding reply. The other five suppliers did not respond at all.
No major supplier has engaged points raised by FSB to protect the small business community, at such a critical time. The small business community has contracted by 10% – 500,000 small firms – over the last two years, and FSB is now concerned that energy providers may be putting many more at risk.
FSB Policy and Advocacy Chair Tina McKenzie said: “The lack of responsiveness from the UK’s big energy suppliers speaks for themselves and matches with what small businesses have been experiencing in the past month.
“While the energy help package is welcomed by small firms, many have come to us puzzled that their bills remain sky-high, 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.
“That’s the opposite of what the EBRS is supposed to achieve. We need more transparency and support around the scheme, which is designed to help tens of thousands of small businesses cope with soaring bills and get through this winter.
“The Government should intervene to ensure that energy suppliers refrain from finding routes to inflate rates for contracts. Energy firms should promise not to disconnect struggling small businesses this winter, in line with their commitments to households.
“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 – when the vast majority of small businesses are fighting for survival from a record-high inflation, rising interest rates and an intensifying consumer pessimism. This is basically kicking small firms when they’re down.”
“Energy suppliers need to recognise their roles in ensuring this multi-billion-pound help package serves its purpose and is not exploited at the expense of taxpayers or the livelihoods of the small business community.”
FSB strongly urges energy suppliers to:
- Provide clear guidance and information to small business customers to explain how the Government intervention will affect their current contract or quote;
- Ensure businesses that signed new fixed contracts after 1 December 2021 but before 1 April 2022 know that they are now included in the scheme and qualify for help;
- Commit to freeze standing charges for small business customers, which unlike domestic consumers appear to be entirely unregulated – we are concerned that these will rise as a stealth/back-door way to raise revenue;
- Pledge not to disconnect any small business customers who fall into arrears and are currently unable to pay for their energy bills this winter – at the moment they can be disconnected after 30 days. This would match commitments to domestic households;
- Introduce a ‘time to pay’ arrangement to help their customers pay arrears over a longer time frame, learning lessons from HMRC and others; and
- Ban requests for disproportionate upfront payments – this is an unacceptable response to higher bills by shoving the risk of that business failure all over to the small business to pay in advance of raising the turnover required to afford to pay for their energy use. This would result in many becoming instantly unviable or driving a business into bad loan markets/cowboy lenders.