Ofgem finds areas of 'significant concern' in business contracts

According to the energy regulator’s letter, it found while some parts of the non-domestic market had shown signs of recovery from a “challenging period of high and volatile wholesale energy prices”, evidence suggested areas of “significant concern” remained.

These included cases where certain contract rates were higher than could be explained by market conditions as well as instances where higher security deposits were required and “significantly” increased standing charges in some occurrences.

Profiteering 

Night-Time Industries Association (NTIA​) CEO Michael Kill said: “Businesses across the night-time economy have been struggling to cover the cost of operating, while energy firms have been profiteering ​at the cost of vulnerable businesses.

“This letter from Ofgem to the Government today outlines our ongoing concerns with regard to the conduct of these energy ​firms, highlighting over inflated contract rates, service charges and security deposits.

“These companies cannot be allowed to get away with this and must be held accountable by the Government and regulator.”

Ofgem added more evidence was required to assure compliance with the rules of the EBRS​ scheme and that it would continue to work with suppliers and the Government to verify conformity and address potential breaches where necessary.

Pragmatic solutions 

The regulator also acknowledged the difficulty faced by some hospitality businesses in securing energy contracts and, together with evidence submitted by stakeholders, would look at what changes were needed to licensing and regulations to better support business customers.

This follows last month’s calls from Ofgem for stakeholders to share their views​ of the non-domestic retail utility market, which closes at the end of this month.  

Additionally, UKHospitality (UKH) chief executive Kate Nicholls urged suppliers to work with business customers to work on “pragmatic solutions” before energy ​support changes come into force in April.

In a post to Twitter, she said: “Given Ofgem’s letter to [the] Chancellor yesterday highlighting there are competition concerns and poor practice in energy supply, particularly to hospitality, we would urge suppliers to work with customers to work on pragmatic solutions ahead of 1 April cliff edge.”

Given @ofgem letter to chancellor yesterday highlighting there are competition concerns and poor practice in energy supply particularly to hospitality, we would urge suppliers to work with customers to work on pragmatic solutions ahead of 1 April cliff edge https://t.co/l8uWFZVGvF

— Kate Nicholls OBE (@UKHospKate) March 15, 2023