SMEs Call for Ofgem Support with Power Struggles

Now, in the midst of winter, small businesses are confronted by the looming threat of sky-high energy bills. The Federation of Small Businesses (FSB) is actively engaging with energy regulator Ofgem, urging substantial changes in energy contracts and standing charges to alleviate the financial strain on these businesses.

The Demands

Despite the protective energy price cap still being in place, small businesses find themselves grappling with persistently high energy costs. FSB National Chair Martin McTague highlighted this discrepancy as business tariffs remain outside the reach of the cap. In a recent survey conducted by the FSB, over 57% of small businesses indicated that utilities were the primary culprit behind rising operational costs during the third quarter of 2023.

FSB’s plea is for Ofgem to introduce a 14-day ‘cooling-off’ period. This proposed measure would empower SMEs to reassess - and cancel if they wish - their energy contracts within a two-week window. Additionally, the FSB is pushing for a freeze on standing charges, alleging that energy suppliers have abused these charges to over-inflate prices.

The FSB's proposal goes beyond short-term relief, with McTague urging energy suppliers to adopt an Ofgem-backed plan, which would allow small businesses trapped in fixed contracts to extend their terms. This proposal seeks to bridge the gap between the original fixed rate and the current lower wholesale energy prices.

The Response

In response, Ofgem has reaffirmed its commitment to creating an energy market where businesses receive good service, fair prices and stability. The energy regulator has opened consultations on how to better support business customers with managing their bills.

In upcoming discussions, Ofgem will explore licence changes aimed at addressing the concerns of businesses and representative bodies. Notably, the ongoing consultation on standing charges demonstrates Ofgem's proactive approach to issues affecting small businesses in the UK.

The Summary

The need for the FSB to consistently highlight the challenges faced by small businesses is concerning. Additionally, as we continue through the coldest months of the year and energy consumption rises, the call for relief on utility bills becomes increasingly urgent without prompt action.

The outcome of Ofgem's consultations and policy changes will undoubtedly have a profound impact on the financial well-being of small businesses across the country, influencing their ability to weather the winter storm. A positive relationship and strong collaboration between regulatory bodies and industry advocates are crucial in ensuring that businesses' concerns are heard.

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