Energy Market Reform Spells Higher Prices For SMEs

Energy Market Reform (EMR) aimed at overhauling the UK’s power generation is likely to hit small and medium-sized firms hardest when it comes to price rises, according to the Energy Advice Line.

Julian Morgan, managing director of the price comparison, switching and advice service for energy users, said the package of measures designed to ‘keep the UK’s lights on’ had now come into effect and would likely impact SMEs the most.

“We expect the EMR to have a significant impact on price rises over the next ten years, as suppliers need to spend £110 billion on new-generation infrastructure,” Mr Morgan said.

Failing But Viable SMEs to be Protected by Government

The Energy Advice Line has welcomed a government initiative to protect failing but viable small and medium-sized firms from having their energy supplies disconnected.

Under the plans, struggling SMEs will have their gas, electricity, water and essential IT services safeguarded while administrators put together a financial rescue package.

Suppliers will have their payments guaranteed before other creditors so that they can be certain their bills will be prioritized. Only if bills remain unpaid 28 days after the rescue package has been implemented will they be allowed to disconnect services.

Ofgem Urged to Investigate Network Costs

The Energy Advice Line has urged Ofgem to investigate network costs as a matter of priority in a bid to improve competition in the UK energy market and deliver lower prices to consumers.

Julian Morgan, managing director of the price comparison, switching and advice service for energy customers, said the costs were a significant factor in domestic and business energy bills and needed to be tackled.

The energy watchdog, Ofgem, has come under fire from MPs for failing to crack down on the energy distribution and transmission costs charged by network companies and passed on to consumers by suppliers.

MPs said the price caps intended to keep the costs down were too generous, and network costs were now a significant and overlooked factor in high bills.

Mr Morgan said the average dual fuel bill now cost more than £1300 per year, with network charges making up almost a quarter of the total. Ofgem needed to do everything in its power to reduce the effective monopoly enjoyed by network companies such as National Grid, Scottish and Southern Energy and Northern Power Grid, he said.

“Ofgem claims it will take eight years to see whether value for money is being delivered to the UK energy market as a result of its regulatory reforms but this is too long for hard-pressed consumers to wait,” Mr Morgan said.

“It needs to put pressure on both network companies and suppliers to reduce these network costs and pass the savings on. There is ample room for customers to enjoy much better value for money.

“The system is also too complex and confusing for consumers, with prices varying around the country and many people very unsure about what these charges are actually for.

“It’s time Ofgem used its regulatory muscle to force energy companies to bring these charges down and it make this aspect of energy bills simpler.”

MPs have asked Ofgem to investigate the feasibility of a national tariff to simplify charging and make prices less volatile, and called on the government to do more to encourage smaller generators to enter the market to increase competition.

“While there are some things that consumers have no control over, like network charges, they can do what they can to keep their bills down by shopping around and switching supplier to make sure they’re on the lowest possible tariff,” Mr Morgan said.

The Energy Advice Line is one of the UK's leading price comparison and switching services for business and domestic energy customers. It is also an advocate for energy market reform and has campaigned for a better deal for energy users, including calling for a ban on cold calling and changes to regulations to make it easier for all consumers to switch suppliers.

The service is completely independent and free. Consumers can quickly and simply search the market for the best available energy deals from an extensive panel of small and large energy suppliers. The service also offers a free advice line for business energy customers.

For further information visit www.energyadviceline.org.uk

Energy Profit Margins Higher Than Ofgem Estimated

The Energy Advice Line has welcomed calls by Ofgem for consumers to switch energy suppliers now in order to save up to £250 a year on their gas and electricity bills.

The call followed confirmation by the regulator that energy companies were failing to fully pass on the fall in wholesale gas prices they had enjoyed in the past year.

Quizzed by MPs this week about why suppliers had failed to deliver bigger price cuts to consumers, Ofgem chiefs agreed this was a “cause for concern”.

But they said they were focusing on encouraging consumers to change suppliers to make savings, adding, “generally it is a good time to switch”.

Rising Energy Costs Are Making Heavy Impacts

Small and medium-sized firms have been urged to check their energy tariffs and compare them to the best deals on the market, following a new survey showing rising energy costs are impacting heavily.

The Energy Advice Line, the UK’s leading price comparison and switching service for energy consumers, said the majority of firms were feeling the effects of high gas and electricity prices and needed to switch supplier regularly.

The Close Brothers Business Barometer, a quarterly survey of SME owners and senior management across a range of industry sectors, found that more than half (59%) of UK SMEs were experiencing increased operating costs.

Over half of those firms said the increases were having a negative impact on their businesses, and of these firms almost two-fifths said that rising energy costs were creating the biggest problems for them.

Complaints & Energy Bills Continue to Rise

Increasingly shrewd energy consumers were exercising their rights and challenging poor service by suppliers, according to the Energy Advice Line.

Julian Morgan, managing director of the price comparison, switching and advice service welcomed new figures showing a massive increase in the number of disgruntled customers lodging complaints against energy companies.

But he said it was disappointing that customers still had so much to complain about at a time when Ofgem was supposedly reforming the energy market with the best interests of consumers in mind.

According to the new figures, complaints to Ofgem have almost tripled over the past year as bills soared and the energy market came under the political and regulatory spotlight. A record 52,308 complaints were made in 2014 – 191% more than in 2013 and over four times the number received in 2012.

Say Hello to New Suppliers

Who doesn't love freebies? Thanks @EAL_CraigS for the photo

We'd like to take a second to welcome two new suppliers to the Energy Advice Line panel; Crown Energy and Extra Energy.

Avoid Expensive Business Electricity Renewal Prices

Customers need to be wary of not ignoring their renewal letter when it arrives from their current business electricity supplier.

A number of suppliers in the UK will tend to offer a renewal rate that is 30-40% in excess of the current retail price with the primary objective that the customer will not act on the letter so that the contract can be rolled over onto more expensive renewal rates.

The suppliers renewal letter is very misleading... 

A supplier's renewal letter can be very misleading in the way that it presents the price to the customer by using terminology such as "Don't worry, we are protecting your business prices for a further 12 months". If this terminology is used in the subject header of the letter many customers will trust their supplier and assume that the electricity rates detailed within the letter are competitive and the supplier is offering their best price first time.