FSB calls for energy price cuts for small businesses

Friday 30 January 2015

The Federation of Small Businesses (FSB) is questioning why business customers have been left out of reduced energy tariffs.

Recently, the so-called 'big six' energy firms, British Gas, EDF, Npower, Scottish Power, E.On and SSE, announced that they would be making reductions in gas prices of between 1.3 per cent and 5.1 per cent.

However, this did not apply to businesses, despite the fact that the cost of energy can sometimes be problematic for limited companies and sole traders.

National policy chairman for the FSB Mike Cherry asked: "Why are small businesses unfairly left out in the cold again? We need assurances by the big energy firms that the decreasing cost of wholesale oil and gas prices will be passed on to business customers, just like domestic customers.

“FSB members frequently say how the cost of energy is a make or break issue. There is far less transparency around pricing in the business market, making it hard for small firms to know if they’re getting the best deal."

Mr Cherry added that the fact that British Gas and E.On are offering price cuts to domestic customers but not to businesses may encourage a view expressed from a number of FSB members; that the service they are getting from suppliers is second rate.

The decision among the big six energy firms to cut domestic energy tariffs follows on from a demand from business minister Matthew Hancock, who said that energy companies should reduce their prices in reflection of falling wholesale gas prices. These fell by 30 per cent compared to the previous year.

Energy prices are one of many costs that have been proving to be a challenge for small businesses. Others include business rates, which many surveys have proven are a challenge and can be a barrier to growth for some firms. However, the government has discussed looking into business rates as well as the potential for them to be reformed.

In the case of the energy prices, it is up to the companies to decide how to react. However, a spokesperson for E.On told Supply Management that it had reassessed prices for small businesses who were paying for electricity and gas and decreased them at the start of January.

An Npower spokesperson, however, said that domestic and business tariffs could not be compared and said that business owners should have a greater onus to engage on how they use and buy energy.

Supply Management also spoke to chairman of the Major Energy Users' Council Andrew Bainbridge, who said that there was a concern about how able a new government would be to effectively manage a handover of energy purchasing and supply.

He added that the catch-up that administration would have to do could be particularly detrimental to business. To try to manage this deficit, the council will be setting up a Utility Markets Policy Group.

By Victoria McDonnell

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