CMA: Businesses paying £280m more per year for energy

CMA: Businesses paying £280m more per year for energy

by Big Mac

Concept: High Energy Costs

 

Small and medium sized businesses have been paying hundreds of millions of pounds more for their gas and electricity every year.
The Competition and Markets Authority (CMA) found “excess profits” made by the Big Six companies from supplying energy to SME customers amounted to around £280 million per year from 2007 to 2014.
Out of that, around £230 million per year is estimated to be related to microbusiness customers.
That means British Gas, EDF Energy, E.ON, npower, ScottishPower and SSE could have charged around 6% more for gas and electricity to microbusinesses “than would have been the case in a better functioning market”, according to the CMA’s provisional findings.
It has set out a package of measures, including those for microbusiness customers to “engage and exploit the benefits of competition”.
It is proposing improved price transparency, which would require suppliers to disclose the prices of all their available acquisition and retention contracts “to a large proportion” of their microbusiness customers.
Suppliers must also disclose their out-of-contract (OOC) and deemed contract prices on their websites.
The CMA believes auto-rollover contracts should not be allowed and microbusinesses should be given greater notice periods with no termination fees as it currently prevents them from switching.
In addition it adds suppliers should prompt microbusiness customers to engage and disclose the details of their “most disengaged” customers to rival suppliers.
“By incentivising microbusiness customers to engage, we would expect the competitive constraint on energy suppliers to increase. This would incentivise suppliers to reduce the prices of their available acquisition and retention contracts for microbusiness customers,” the report states.