Small Businesses to Benefit From More Transparency in Energy Markets

The Competition and Markets Authority (CMA) has announced measures to help small and micro businesses make significant savings on their energy costs.

During its 2-year investigation into the energy market in 2016 the Competition and Markets Authority (CMA) found that about 45% of microbusinesses across Great Britain are stuck on their supplier’s expensive ‘default’ tariffs. The study concluded that it was difficult for owners to shop around and switch to cheaper deals, as energy price information is not easily available. In some cases, microbusinesses also found themselves being ‘rolled over’ onto these contracts, with limited opportunities to switch, when their original deal ended.

Energy suppliers only published a full list of available tariffs for domestic customers, so it was more difficult for microbusinesses to compare and switch energy deals than for households. Automatic rollover clauses meant that if a fixed-term contract was not terminated or renegotiated before its end date, then some contracts would automatically continue, often at a higher tariff and with termination fees and no-exit clauses that made it expensive to switch.

The CMA has ordered suppliers to stop locking small firms into automatic rollover contracts and to make it easier for microbusinesses to compare the cheapest energy prices, by making information clearly available on their website, or via a link to a price comparison website. This week marks the start of these new requirements.

Taken together it is hoped that the CMA’s measures will not only drive down bills, but will also make it easier for microbusinesses to switch suppliers once their initial contract has ended. micro businesses will only need to add 2 relevant pieces of information, their postcode and rate of consumption, to get a personalised quote.

Roger Witcomb, Chairman of the Energy Market Investigation, said "Small businesses rely on keeping overheads down to survive, so to find that nearly half of the microbusinesses across the country were on pricey default deals was worrying.

That’s why the CMA ordered energy suppliers to stop automatically rolling small business customers onto fixed-term tariffs and to help their customers more easily find information on the deals available. These, alongside 30 other measures resulting from the investigation, will help energy customers make sure they are on the most competitive deal in future."