UK energy probe 'should be extended to business users'
3 Sep 2010
London – M&C Energy Group, which represents some of the UK’s largest users of energy, has highlighted what it calls ’sharp trading practices’ by energy providers when supplying business users.
The issues of debt blocking, automatic rolling contracts and stifling contract terms coincide with today’s announcement that four of the ’big six’ energy providers face investigations for mis-selling consumer contracts.
Thousands of businesses are paying ’well over the odds’ for their energy simply because their current energy provider is making it difficult for them to switch, according to David Hunter, M&C’s energy analyst.
“Without doubt almost all of the ’big six’ are involved in questionable practices with regard to business users,” said Hunter. “While steps have been made to simplify switching consumer contracts, little has been achieved to offer the same benefits to businesses - other than the very smallest users. The hoops organisations have to jump through to change suppliers are a huge disincentive even with the promise of big savings.”
M&C, which purchases £4 billion of energy on behalf of its clients annually, has also seen an increase in suppliers ’debt blocking’ a client over recent years. That means if there is any debt on the account, not matter how small, the supplier can effectively block that business switching to another supplier.
Cherry picking businesses is also on the increase with significantly more clients having the choice of only one supplier, and on punitive terms, due to ’less than perfect’ credit rating.
Rolling contracts is also an issue, particularly with SMEs, M&C noting that suppliers have an obligation to inform the customer when their contract is about to expire.
Often this letter either doesn’t arrive or it is not presented in a way that the client registers its contents and that businesses is then unwittingly tied into an extra two years on dictated terms without the opportunity to renegotiate on price, the comnpany said.
“Client dissatisfaction with suppliers is definitely on the increase as businesses look to save money and providers seek to hang on to their customers,” concluded Hunter.
