RUNAWAY business energy costs are hitting small firms hard as inflation spirals, according to a new survey.
Research by employer organisation the Forum of Private Business has found that 94% of firms saw their energy bills increase over the past year, followed closely by rises in transport costs (92%) and the price of raw materials (82%).
The Forum has called for a Code of Conduct to be developed to protect small firms from unfair treatment by utility companies, similar to that which protects domestic energy consumers.
In particular, the Forum has called for a cap to be introduced on ‘back billing’ where firms are charged retrospectively, for example, due to a faulty meter. Under the proposals, where a firm with fewer than ten employees has taken all reasonable steps to avoid being back billed, utility companies would have to limit retrospective business electricity charges to 3 years, and a negotiated period for business gas bills.
The Forum also wants to see fairer business energy contracts introduced to protect business energy users from being automatically ‘rolled over’ onto more expensive energy deals.
The Forum is working with energy regulatory Ofgem and the Energy Retailers Association (ERA) on the proposals.
Not surprisingly, the Forum’s research also shows that firms more reliant on energy such as manufacturers, and those in labour-intensive sectors such as catering, reported higher than average business energy cost increases.
Julian Morgan, managing director of the Energy Advice Line, the UK’s leading energy price comparison and switching service for business, welcomed the Forum’s calls for a fairer deal for small firms.
But he said that businesses could help themselves reduce the impact of business energy price hikes by using the services of an impartial price comparison and switching services like the Energy Advice Line.
“In this climate of rising business energy prices, we can help firms take control of their business energy arrangements by ensuring they don’t get trapped in expensive rollover contracts,” Mr Morgan said.
“We can also help firms save money by hunting out the best business energy deals from our panel of suppliers. In some cases we can offer exclusive deals that are not available elsewhere in the market.”
Mr Morgan said firms were most vulnerable to excessive business energy price increases where their business energy contracts expired, and they were rolled over onto more expensive deals, often without being aware it had happened.
“This is where we can really help,” Mr Morgan said. “We offer a free renewal reminder service and we can explain exactly what firms have to avoid being hit hard but this discriminatory tactic by the utility companies.”
For further information visit www.energyadviceline.org.uk