5 July 2017

Micro-businesses stand to make significant savings on their energy costs thanks to new rules that entered into force on 26 June.

From that date, the Competition and Markets Authority (CMA) requires energy suppliers to stop locking small firms into automatic rollover contracts.

Suppliers also have to make it easier for micro-businesses to compare the cheapest energy prices, by making information clearly available on their website or by providing a link to a price comparison site.

The CMA estimates the provisions will help the very smallest businesses save up to £180 million a year – a figure based on a two-year investigation into the energy market which revealed that some 45% of micro-businesses were tied in to their supplier’s default tariff.

Not only do such contracts tend to be more expensive than other options, but micro-businesses often find themselves being "rolled over" into them at the end of their original deal, with only limited opportunities to switch.

Speaking for the Office of Gas and Electricity Markets (Ofgem), Dermot Nolan confirmed that further steps are being considered in order to protect and help businesses energy customers.

For the Federation of Small Businesses, Chairman Mike Cherry said that, for too long, many small businesses have had a raw deal in the energy market, and that publishing prices and banning unfair auto-rollover terms should bring some much-needed fairness and transparency to the energy market for micro-businesses.

As with residential energy users, businesses can save significant amounts by testing the market, Mike Spicer of the British Chambers of Commerce (BCC) noted.

The remedies announced by the CMA, particularly the halt on automatically rolling companies onto fixed-term tariffs, will help ensure that fewer are paying more than they should, he said.

The full text of the Energy Market Investigation (Microbusinesses) Order 2016 can be found at http://bit.ly/2tdkXhR.