CMA measures to help small firms cut energy costs

CMA measures to help small firms cut energy costs

CMA measures to help small firms cut energy costs

Businesses that invest in making sure they have a clean, efficient and eco-friendly workplace will benefit in a number of ways.

They will have a healthier and happier workforce, for a start, and will also send a more positive message to visiting clients and prospective job candidates.

Another big advantage of making sure the office is environmentally friendly is lower energy bills. On this front, the UK's smallest businesses have recently received a helping hand from the Competition and Markets Authority (CMA) following a two-year examination of the energy market.

The investigation found that about 45 per cent of microbusinesses across Britain were stuck on their supplier's expensive 'default' tariffs.

A number of problems were identified in the market, including poor availability of energy price information, which made it difficult for business owners to shop around and switch to cheaper deals.

In some cases, firms had been automatically 'rolled over' from original deals with their energy provider onto pricier default tariffs, with limited opportunities to switch.

The CMA found that suppliers were making it much more difficult for business customers to view available offers and look into changing their provider than for domestic users.

In response, the authority developed a number of measures that took effect on June 26th, one of which orders energy companies to stop locking microbusinesses into automatic rollover contracts.

When it comes to switching, suppliers are now required to make it easier for business users to compare energy deals, by listing information on their own website or by providing a link to a comparison site.

Firms will only need two key pieces of information - their postcode and rate of consumption - to receive a personalised quote.

The CMA hopes that these actions will help the UK's smallest companies to reduce their energy spending by up to £180 million a year.

Roger Witcomb, who chaired the energy market investigation, said it was "worrying" to find that nearly half of Britain's microbusinesses were on expensive default tariffs, seeing as so many of these firms can only survive if they keep overheads down.

Dermot Nolan, chief executive of Ofgem, the gas and electricity market regulator, commented: "The requirement on suppliers to clearly display their prices online to microbusinesses will make it much easier for these businesses to compare prices and shop around. This is a big change in the way the market works."

The Federation of Small Businesses also welcomed the changes, with national chairman Mike Cherry saying that smaller firms had been getting a "raw deal in the energy market" for too long.

He added: "These CMA remedies are a step in the right direction. Published prices and a ban on unfair auto-rollover terms should bring some much-needed fairness and transparency to the energy market for microbusinesses."

There are various steps companies can take to lower their gas and electricity bills by reducing consumption, such as installing energy-efficient appliances, using insulation and keeping office heating under control.


Posted by Julie Tucker

Image courtesy of iStock/baloon111