Small businesses call on Ofgem to outlaw rollover contracts

The Forum of Private Business has called on energy regulator Ofgem to ban so-called "roll-over" contracts for business customers.

Ofgem recently signalled that it would not outlaw the contracts, which lock customers in to their energy suppliers for the next period unless they take action to cancel their contracts. The FSB joined the Association of Convenience Stores (ACS) and the Utilities Intermediaries Association (UIA) in condemning that decision, saying it was a u-turn on previous plans to outlaw the contracts. The groups accused Ofgem of bowing to pressure from energy companies.

ACS said its reserach showed that one in five businesses received inadequate notice that their energy contracts were coming to an end. One in ten had received backdated bills and one in four businesses had initially been offered unfavourable renewal terms.

FPB and ACS also voiced concerns that proposals by Ofgem to ease the contracts - such as 30-day notice periods to allow businesses to renegotiate contracts - apply only to micro-businesses (those employing 10 staff or fewer), and not other small business employers.

"Time is running out for Ofgem to take on board how unpopular and damaging rollover contracts can be," said FPB spokesman Phil McCabe. "Members have told us that they are given extremely inadequate notice periods, with some saying they receive no notice at all. Often, they are then forced to pay much higher rates. This is simply unfair."

He added: "These 'evergreen' contracts stifle competition within the energy market because they prevent business owners from shopping around for a better deal.

Author: Paul Newton,
Channel: Policy & Regulation
Tags: Regulation

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