UK SMEs losing millions in 'roll-over' energy contracts

17 August 2015

UK businesses are losing out after being locked into energy contracts without their permission, a study says.

Price comparison website switchmybusiness.com found 18.4 per cent of businesses surveyed had been automatically rolled over onto a new contract without their permission.

More than 30 per cent of small businesses had been put on a ‘deemed contract’ – where the customer continues to use energy after a deal has finished – with the same supplier at the end of a fixed contract, leaving them paying up to 80 per cent more, according to the website. A further 16.8 per cent of all respondents were unsure whether they have been put onto a deemed contract. Just over half of SMEs surveyed stated they had had problems understanding their energy contract (50.4 per cent).

In July, a Competition and Markets Authority (CMA) report found SMEs were unnecessarily spending £500 million a year on energy.

More than a quarter of small to medium-sized businesses (25.6 per cent) do not fully understand how to end their current business energy contract, meaning as many as 1.3 million businesses are losing out on better energy deals, the research added.

Switchmybusiness.com chief executive Ivan McKeever said the findings proved UK SMEs were still getting a raw deal.

“Smaller to medium-sized businesses are in a uniquely challenging position - the business energy market lacks the transparency that consumers now have and smaller businesses do not have the resources to liaise with lots of suppliers and negotiate a good deal," he said.

The website is calling on the UK government to ban automatic renewal of contracts, put a cap on how much more businesses which are on deemed contracts are charged, and require suppliers to make information easily accessible and switches more straightforward.

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