Don't be fooled by proposed energy price reductions

23/01/2012

Businesses have been warned not to be fooled by proposed tariff cuts from the Big Six energy suppliers.

During the past couple of weeks firms such as Scottish Power and EON have stated that they will be reducing their energy costs, but as Make It Cheaper’s Nick Heath told GreenWise, the savings may not apply to commercial energy users.

"Don’t fall into the mistaken belief that the price cuts being announced are going to be passed onto business customers. It’s not true," Mr Heath stated.

"If businesses sit back and do nothing, they are actually going to see their tariffs go up because roll-over rates are actually 50 per cent higher."

Indeed, it is predicted that businesses could see their energy costs rise by as much as 15 per cent before the end of this year.

Part of the reason why firms end up paying exorbitant amounts for their energy use is because there are locked into deals with their supplier.

Unlike domestic gas and electricity customers, switching to a more competitive tariff has to be done in a very short period of time before their old tariff rolls over on to a new agreement at a higher level.

Due to this many businesses miss the boat when it comes to saving and end up paying through the nose to heat and operate their premises.

The regulator Ofgem is currently working on a consultation paper which it hopes will help to safeguard businesses from the often unfair practices employed by energy suppliers.

But critics argue that even that is not enough and suppliers should be forced to print details of the contract and its end date on any bills which they send out to customers so that notice can be served accordingly by any firms wishing to avoid roll-overs and secure a new deal.

Last year telecommunications regulator Ofcom brought in a ban on BT using roll over contracts to tie customers in against the will.

Posted by Richard Smart