Business access to new energy proposals must be addressed
February 6, 2024
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Proposals from the Government and energy regulator Ofgem are positive but should apply to all businesses, UKHospitality has said.
What is being proposed?
There are a number of proposed changes to offer businesses better protections in the energy market:
- 1
Standards of Conduct
The Standards of Conduct rule is proposed to be expanded to include all customers to ensure that everyone receives fair treatment.
- 2
Energy Ombudsman
The Government is proposing to expand access to the Energy Ombudsman to businesses who fit a new ‘Small Business Consumer’ criteria.
Currently, only micro-businesses could access the Ombudsman.
- 3
Complaints Handling Standards
It is proposed that these standards are widened to include businesses that fit the ‘Small Business Consumer’ criteria.
- 4
Brokers
There are two proposals to address brokers.
An existing rule will be expanded to ensure that energy bills clearly show costs associated to third parties, including brokers. This will be for all customers.
Requirements for suppliers will also be widened to require suppliers securing Small Business Consumer contracts through third-party intermediaries (TPIs) to only work with TPIs who are part of a redress scheme.
What is the Small Business Consumer criteria?
The Small Business Consumer definition includes businesses that use no more than 500,000 kWh of electricity per year, or use no more than 500,000 kWh of gas per year; or who have fewer than 50 employees and have an annual turnover no greater than £6.5 million or balance sheet total no greater than £5 million.
Our response
Kate Nicholls, CEO, UKHospitality
UKHospitality supports these additional measures to improve protections for hospitality businesses but has called for all businesses, regardless of size, to have access. As currently proposed, thousands of businesses would be unable to feel the benefit.
The new protections come after UKHospitality led a campaign for better protections for businesses against unfair practices used by energy suppliers. Almost 400 hospitality businesses mobilised behind the campaign to write to the regulator demanding action.
Kate Nicholls, Chief Executive of UKHospitality, said: “The past two years have shone a light on the bad practice taking place in the energy market for businesses. At a time when energy prices went through the roof, hospitality venues were left with no effective protections against unfair and damaging practices by some energy suppliers.
“I’m pleased that Ofgem listened to UKHospitality’s concerns, and those of our members, by bringing forward a rigorous review into the market, which led to these proposals being introduced.
“While we support the measures, as they do increase protections for some businesses, the vast majority will not feel the benefit under the current proposals.
“No business should be excluded from these types of safeguards, just because they have grown to a point where they exceed an arbitrary figure for turnover, revenue or employees.
“We would urge Ofgem and the Government to revise these measures to include all businesses or, at the very least, those that fall under the much-wider definition of an SME.”
What is the SME criteria?
This criteria is much wider than the Small Business Consumer criteria. It includes businesses under 250 employees; or an annual turnover no greater than £36 million; or an annual balance sheet of under £18 million.
