RED TAPE – A WASTE OF ENERGY
New rules intended to simplify electricity and gas contracts for businesses have created confusion and a ‘spaghetti junction of red tape’, according to business price comparison service Make It Cheaper.
As of January 18 this year - following a two year investigation by Ofgem - two million businesses should be benefitting from greater consumer protection in relation to their electricity and gas contracts. However not only does each supplier have a different ‘interpretation’ of the new rules, but they only have to apply them to business energy contracts entered into from January 18, 2010. Whilst one of the Big 6 suppliers has indicated that it will apply the rules retrospectively on all existing contracts, this still leaves the vast majority of business energy customers at the mercy of their existing terms and conditions.
Business energy suppliers each have different T&Cs that can run to over 10,000 words in length and only allow customers to serve notice in narrow renewal windows that quietly open and close with months left to run on the contract. Anyone missing the renewal window is automatically denied the right to switch to the cheapest electricity supplier for at least another year. Our research shows that this ‘rollover’ technique catches out over 80% of businesses and is commonly used by energy suppliers to lock customers into much higher rates than those available to new customers/switchers.
A further area of confusion is the size of business to which the new rules are restricted, should they wish to compare electricity prices. Ofgem uses the description ‘microbusiness’ but then offers several definitions. These include: businesses employing fewer than 10 people, with an annual turnover of less than 2 million euros, or energy use of less than 200,000 kWh of gas a year or 55,000 kWh of electricity a year. Again, some suppliers are rigidly applying these definitions whilst others will consider SMEs of all shapes and sizes as qualifying for the new rules.
FOR MORE INFORMATION :
• Visit: www.makeitcheaper.com
• Call: 0800 970 0077.
