Energy contract rollovers ‘unfair’ on small businesses

The Federation of Small Businesses has backed a bill that aims to stop small companies being locked into 'unfair' energy contracts.

The Micro Business and Energy Contract Rollover Bill, tabled by Caroline Lucas MP, aims to tackle the practice by energy companies of rolling over contracts and locking small firms into un-negotiated and often more expensive terms for a full 12 months.

If passed it would limit this to 30 days, helping to deliver a ‘fairer’ energy market for the smallest businesses.

FSB research has found that one in four small firms had been rolled over without their knowledge and and 82 per cent of respondents say they would support the abolition of rollovers.

FSB national chairman John Walker says, ‘Micro firms – those with fewer than ten employees – are often unaware of the terms relating to contract rollovers. The FSB believes this is being used to lock micro businesses into unfair contracts.

‘The smallest firms need much more protection from these unfair practices. It is something which government and Ofgem must tackle to give small firms a better deal at the hands of the big six energy companies. We will be looking for a firm assurance from the minister that he will direct Ofgem to tackle the issue of micro business rollovers once and for all.’

Caroline Lucas, MP for Brighton Pavilion, adds that with the rising cost of energy now a ‘make or break issue’ for many small firms, it’s time to hold the energy giants to account for the ‘damaging practice’ of contract rollovers that delivers a ‘bad deal’ for micro businesses.

‘It’s deeply unfair that, while micro businesses often consume products and services in a similar way to domestic consumers, they do not enjoy the same level of regulatory protection.

‘This leaves them vulnerable to being ‘rolled over’ from their current energy contract into a new one without their knowledge – making it impossible for them to negotiate a better deal for another 12 months.’

She adds that, back in 2009, Ofgem gave indications that it would tackle the issue of rollovers once and for all, but ‘caved into pressure from the big energy lobby at the last minute’.  

‘My Private Member’s Bill is about asking the government to act to ensure the energy regulator finally delivers on its promise – and stands up for the UK’s micro businesses.’

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