Business groups attack energy regulator's u-turn on rollover contracts

The Forum of Private Business (FPB) is condemning the move, had welcomed Ofgem's original recommendation, made as part of its probe into the energy supply market, that suppliers should not be allowed to automatically roll over fixed-term contracts. Now, energy companies are likely to be permitted to do so for up to a year at a time. The regulator's u-turn follows pressure from the big energy providers, including E.ON, npower and EDF Energy. Utilities companies say that banning rollover contracts would create additional costs for both themselves and their business customers, as the providers use those contracts to help them purchase energy many months in advance. Businesses can also incur costs if they do not renegotiate their contract on time, and could end up paying prohibitively expensive out-of-contract rates. "It's disappointing to see Ofgem stepping back from its initial stance on protection for small business customers," said the FPB's Chief Executive, Phil Orford. "Business owners should have as much control as possible over their utility bills." He added: "Allowing year-long rollover contracts would continue to stifle competition within energy markets. Competition will only be increased by small businesses being able to shop around for suppliers. "We want Ofgem to revert to its previous commitment to end rolling contracts for all businesses with 50 employees or fewer and turnovers not exceeding €10 million, which is the European Commission's definition of a small business." In earlier research carried out by the FPB, 60% of respondents called for a dedicated watchdog to mediate between small businesses and utilities providers, for example to ensure that any fall in wholesale energy costs is passed on to customers within a reasonable time period. The FPB believes that a similar level of service provided to domestic customers should also be offered to small businesses, beyond the micro-definition proposed by Ofgem. FPB member Jackie How runs Bella Vista, a guest house in Paignton, Devon. Tied in to a rolling contract, she has endured months of uncertainty as Utility Options negotiated, ultimately successfully, with British Gas for a more favourable tariff. "Rollover contracts mean a very high energy bill – I'm assured at least half as much again as it should be," said Mrs How. "I have managed to secure a better tariff, by changing my meter to a different type, but I don't think they [roll over contracts] should exist at all." Weblink: www.fpb.org