Tag Archives: Ofgem

New Small Business Energy Rules ‘Confusing’

Ofgem’s new rules for the small business energy market come into play yesterday – Monday 18th January, 2010. While designed to give greater protection to Britain’s SMEs, according to uSwitchforbusiness.com, the dedicated SME price comparison and switching service, the rules are in danger of confusing business owners and put too much onus on them to take action.

Jake Ridge, small business expert at uSwitchforbusiness.com, says:”Ofgem is doing the right thing in offering Britain’s SMEs greater protection in the energy market. However, these new rules have fallen far 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.

“Small businesses need to understand the rules quickly to ensure that they benefit from the additional protection being offered. The key thing is that the rules only apply if you are a micro-business so check whether you qualify and let your energy company know straight away if you do. This means that when you come to renew your contract your supplier must provide you with clear written details of the full terms and conditions plus ensure you get suitable notice so that you can shop around for a new deal. Check with your supplier if you are unsure when your current contract will end.

“You also now have the right to opt out of being rolled-over – 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.

“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.”

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 Euro 2 million or less.

Via EPR Network
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Thin End of Wedge As GBP4.30 Added onto Electricity Bills

Energy regulator Ofgem has signed off investment in the regional electricity networks that will add GBP4.30 a year onto household electricity bills. However, this is just the thin end of a wedge warns a uSwitch.com as it is a small part of a much broader GBP233.5 billion energy investment programme that is expected to add GBP548 a year in total onto consumer energy bills.

This could see household energy bills hit as high as GBP4,733 a year by 2020, nearly four times higher than they are today. Ofgem itself calculated that household energy bills could hit GBP2,000 a year as a result of investment, but recently described this as ‘over optimistic’.

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: “GBP4.30 a year may seem small fry, but in fact it’s a wake-up call for us all. This is just the beginning of a huge investment process that will lead to significantly higher household energy bills. The GBP5,000 a year energy bill may seem like an outside possibility, but we have to remember that energy bills doubled in the last five years alone and that the huge investment needed just to keep the lights on in Britain will alone add GBP548 a year onto our bills. The fact is we are entering a new era of high cost energy and households will have to adapt their behaviour accordingly.

“The Government has been banging the drum for energy efficiency for a while now, but consumers have been reluctant to spend money on these measures. As a result, energy efficiency has been massively underperforming even though it is one of the biggest defences we have against escalating energy costs. We also have a competitive energy market, and yet less than 5% of consumers are on the most competitive energy plans – most people are paying far more than they have to for the energy they use.

“This has to change. My advice to consumers is to invest in making your home more energy efficient, reduce the amount of energy you use and make sure you are paying the lowest possible price for it. Big projects such as a new energy efficient boiler or home insulation can be expensive, but the savings you make through cutting the price of your energy could be re-invested into energy efficiency measures so that you reap even greater rewards in the future.

“Don’t be put off. If cost is an issue, speak to your supplier to see if they can help – they have a pot of money available to help households with energy efficiency. Or contact the Energy Saving Trust for advice. The key thing is to start future-proofing yourself against higher energy bills now.”

Via EPR Network
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uSwitch.com Calls For Tougher Rules And Regulations To Govern Energy Doorstep And Direct Salesmen

uSwitch.com, the independent price comparison and switching service, is calling on industry regulator Ofgem to bring out tougher rules and regulations to govern energy doorstep and direct salesmen, after new research revealed that their sales tactics are leaving people feeling pressured, intimidated and on the wrong energy plan for their needs.

According to the research, almost 7 million UK households have taken out an energy plan on their doorstep or through a direct salesperson. However, less than a quarter of people who have done so (22%) believe they got a good deal. Of these, only 6% said that it reduced their bills significantly while just 16% said that they were very pleased with the deal they took up. On the flip side, 17% found that their new deal cost them more money than the one they switched from and almost a quarter (22%) said that they could have done better elsewhere.

Over four in ten people (44%) think that direct sellers on their doorstep, high street, at the local supermarket and on the phone are a nuisance. But for some consumers it crosses the line into something altogether more sinister with 22% finding salespeople intimidating and 59% finding the process too pressured, preferring time to think and make their own mind up.

More than a third of people (37%) think that salespeople don’t present them with enough information to make an informed choice, while almost half (45%) don’t like the fact that salespeople only represent one energy supplier – they would prefer to know what all the companies are offering instead.

As a result of growing unease and, in some cases, outright distrust, 82% of consumers would not buy directly from a salesperson. Almost a third (32%) would like to see tighter regulation, but over half (53%) would like to see the practice banned. Despite the fact that many elderly and vulnerable customers prefer to buy face-to-face or with direct human contact, almost three quarters of consumers (72%) say that direct selling does not have a valuable role to play in helping these groups to switch.

According to Ofgem, over half of consumers who switched in the past year did so through a direct or doorstep seller and vulnerable and prepayment meter customers are more likely to switch in this way. This suggests that rather than an outright ban, the regulator should be looking to keep open this important route to market for vulnerable consumers, but make sure they are fully protected and able to get the same level of information as those consumers who are able to shop around or do their own research.

Although Ofgem is bringing in rules to ensure that direct sellers have to provide consumers with a written quotation, uSwitch.com would also like to see consumers given more information about the types of deals available to them and a prompt to research the market before signing on the dotted line.

Via EPR Network
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Direct Debit Fears Could Cost Consumers £33.5 Million

Ofgem is being urged to act quickly to stem the flow of consumers ditching direct debits and opting to pay energy bills by cash or cheque instead. New data f r o m uSwitch.com, the independent price comparison and switching service, shows a 7.3% drop in the number of switchers paying by fixed monthly direct debit, falling f r o m 92% a year ago to 85.3% today. Across the market it could mean 342,000 households less a year taking up the option and losing out on discounts totalling £33.5 million as a result.

According to Ofgem, over 40% of customers pay their energy bills by direct debit. Not only is this payment method convenient, but it is cheaper too as suppliers give discounts to customers paying in this way. These amount to £98 a year on average. The impact on household bills is noticeable – while the average household energy bill for a customer on a standard plan paying by cash or cheque is £1,239, this drops to £1,141 on average for those paying by direct debit.

More importantly, paying by direct debit is the gateway to suppliers’ cheapest tariffs – these can be found on their online energy plans. To get them, consumers need to pay by direct debit. The average household energy bill for an online customer is £1,021 – £218 cheaper than for a customer on a standard plan paying by cash or cheque.

But despite the cost implications, consumers are starting to shun direct debits. According to uSwitch.com this stems back to last year’s 42% or £381 price hikes which only hit many direct debit customers this year. Almost a third (30%) only had their direct debits increased in the first three months of this year – even though the price increases happened last year. As a result, many were playing catch up to make up for months of under paying and so were shocked when their supplier advised them how much their direct debit had to be adjusted by to compensate.

Not surprisingly, when advised of increases to direct debits a third of people (33%) felt compelled to contact their supplier. Following this 4% cancelled their direct debit even though this would increase the cost of their energy. And they’re not alone – according to the new data there has also been a 217% increase in people choosing prepayment meters (up f r o m 0.6% to 1.9%) and a 106% increase in people choosing variable direct debits – up f r o m 1.6% to 3.3%. In total, these shifts in payment methods could see 351,900 households paying more for their energy than they need to this year.

“Paying by direct debit opens the path to the cheapest energy prices in the market – this is not something to give up without a fight. If you are worried about the amount you are paying, contact your supplier to find out whether the monthly payment can be lowered. Make sure you are paying the lowest possible price for your energy by shopping around, cut down on the amount of energy you use and make sure you or your supplier is taking regular meter readings. Above all, be aware that coming off fixed monthly direct debit and paying by cash, cheque or variable direct debit will cost you money. This should always be a last resort.”

Via EPR Network
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