Small business owners have been advised that Ofgem's new rules for the small business energy market come into effect from today.
However, while Ofgem's attempt to offer SMEs greater protection has been welcomed there are fears that the new rules have fallen short of the simple blanket ban on evergreen or rollover contracts that was initially proposed and, as a result, are in danger of confusing busy SME owners.
The new rules only apply to micro-businesses, which Ofgem defines as a company that meets any one of the following criteria:
- Consumes less than 200,000 kWh of gas per annum
- Consumes less than 55,000 kWh of electricity a year
- Has less than ten employees (or the full-time equivalent) and an annual turnover or annual balance sheet total of €2m or less
"Small businesses now have the right to opt out of seeing their contract be rolled-over by energy companies - as soon as you sign a new energy deal let the supplier know you are opting out and this means that you can only be put onto a 28 day notice rollover plan at the end of your contract leaving you free to move to a better deal," said Jake Ridge, small business expert at uSwitchforbusiness.com.
"The rules are complicated and unfortunately put too much onus on SME owners. But it's a step in the right direction and should hopefully see more small businesses avoid the expensive trap of 'evergreen' energy contracts."
Guide to cutting business energy bills:
1) Make a note of your renewal date on your current contract and make sure you start searching for a new deal before it comes up
2) Have recent electricity and gas bills to hand so that you can supply accurate usage details along with the reference numbers of your meters (MPRN for gas and MPAN for electricity)
3) Go online to arrange a call back or call your broker direct to discuss your needs
4)Once you have your quotes, decide whether to switch or not
5) If you switch, you will need to give termination notice to your current business energy supplier and agree to your new contract - all other paperwork is dealt with for you
6)The whole process takes between 4 - 6 weeks - your new supplier will advise you of the switching date
7) There will be no interruption of supply while the switch is being processed.
