Sector reacts to OFGEM's vow of 'fairer treatment' on energy

By Rebecca Weller

- Last updated on GMT

Clear direction: Experts warn pubs are still dealing with unfair energy contracts (Credit: Getty/quantic69)
Clear direction: Experts warn pubs are still dealing with unfair energy contracts (Credit: Getty/quantic69)

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Industry experts warn OFGEM’s non-domestic market changes must be enforced with “clear direction” to tackle the most “damaging issues”.

Meanwhile, pubs continue to face "unfair" and "inadequate" service from energy suppliers, the sector leaders added. 

Following a non-domestic market review, the energy regulator last week said the changes would mean “fairer treatment, more support resolving disputes and greater transparency on broker fees” for businesses.

Under the changes, from July 1 OFGEM will expand the Standards of Conduct to apply to businesses of any size, rather than just Micro Business customers.

While the changes have been “welcomed”, Nationwide Energy operations director Gerry O’Hara told The Morning Advertiser​ pubs continue to battle “inadequate” service.

He said: “Ofgem’s non-domestic market review decisions are to be welcomed, primarily for extending meaningful support via the Energy Ombudsman from micro-businesses with less than 10 F/T staff or €2M turnover, to small businesses with less than 50 F/T staff or £6.5M turnover, bringing a lot more businesses in scope and requiring suppliers to treat all customers fairly.

“Greater transparency on energy cost components including broker commission is also a positive development.

“We know many pubs continue to receive very poor customer service, inadequate responses to complaints, and are declined supply contracts due to the sector they are in, rather than business-specific reasons.

Unfair contractual terms 

“Without clear direction on enforcing prompt processing of changes of tenancy, good customer service, and preventing suppliers from excessive charges many of the most damaging issues which prompted this review are unlikely to improve significantly.”

Though managing director of Stroud Brewery Greg Pilley​ told The Morning Advertiser​ anything that would ensure "reliability, consistency and best value" was welcomed.

"The volatility and huge variation in electricity prices has had a huge impact on our business over the last two years. As a business striving to meet global emission targets, we would welcome forward thinking and investment in long term, reliable, renewable energy supply", he added.

A new supply license rule for non-domestic suppliers will also be introduced, which requires them to signpost Micro Business customers to Citizens Advice.

This will also apply to small business consumers from December, subject to the new definition entering legislation.

Though British Institute of Innkeeping (BII) CEO Steve Alton also raised regarding continued pressure on the sector.

“We welcome the news that OFGEM are enhancing the protection and support for small businesses, especially with regards to transparency around broker fees.

“However, for pubs specifically, there are still too many instances of unfair contractual terms, high rates for supply and increased standing charges and fees, based solely on the fact that they are a pub business.

“Until there is a level playing field of fairly priced energy for small hospitality businesses, who provide support for their local communities and supply chains, the pressure on their businesses will remain high”, he said.

Challenging situation 

Further changes expected to be in place by the end of the year include expansion of the requirement for a contract’s principle terms to display any broker fees from Micro Business consumers to all non-domestic customers, applicable to contracts signed after 1 October.

The complaints handling standards will also be updated from December to ensure suppliers put in place suitable complaints processes for small business customers and point them to the energy ombudsman.

A requirement for suppliers to work with brokers that are member of a redress scheme when securing small business contracts will also be implemented by the end of the year.

UKHospitality (UKH) chief executive Kate Nicholls said: “I’m very pleased OFGEM has taken steps to enhance protections against unfair treatment by energy suppliers.

“The lack of protection for businesses was obvious for all to see and these changes demonstrate that our concerns have been heard loud and clear by the regulator.

“Extortionate energy costs have been a huge restraint on businesses over the past two years and the behaviour of some energy suppliers exacerbated that already challenging situation.

“I hope these measures go some way to mitigating these costs and protecting businesses, but I’d continue to urge energy suppliers to be proactive in supporting their business customers.”

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