LOBBY group the Federation of Small Businesses (FSB) is lending its support to a private members’ Bill which aims to stop energy companies rolling over businesses’ contracts without consultation.
There has been concern for some time that small firms, especially micro-firms, are being locked into un-negotiated and often more expensive terms for a full 12 months due to the practice.
MP Caroline Lucas is tabling the Micro Business and Energy Contract Rollover Bill, which would prevent this from happening in future.
Instead of trapping businesses into new contracts for a year, they would be allowed to switch after a maximum of 30 days.
The FSB’s own research found that one in four small firms had been rolled over on to a new energy contract without their knowledge. More than eight in 10 of those questioned said they would support the abolition of rollovers.
FSB national chairman, John Walker, said: “Micro firms – those with fewer than 10 employees – are often unaware of the terms relating to contract rollovers. The FSB believes this is being used to unfairly lock micro businesses into unfair contracts. The smallest firms need much more protection from these unfair practices.
“It is something which Government and Ofgem [the energy watchdog] 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.”
Ms Lucas, the Green Party MP for Brighton Pavilion, said: “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.
“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.”
The Bill is scheduled to be debated again by MPs on March 1.