Hundreds of thousands of SMEs trapped in energy bill contracts

Energy suppliers are being urged to allow small firms locked into fixed tariffs from last year, to renegotiate their contracts for fairer deals.

The Federation of Small Businesses (FSB) say that hundreds of thousands of SMEs are trapped in contracts that mean their latest bills are at last summer’s peak market rate for energy – yet wholesale prices have fallen since last winter.

FSB Policy Chair Tina McKenzie, commented, “Having come out from a tough winter, this Spring is supposed to be the beginning of economic recovery, but tens of thousands are still very much in survival mode because they are tied-in to sky-high energy contracts.

“Many small businesses agreed to lock in energy contracts last year to ensure they qualified for the maximum level of Government support. Now, with that support largely disappearing, they are once again faced with massive energy bill hikes as rates go back to pre-Energy Bill Relief Scheme level.

“If ending the successful support scheme is on the basis that wholesale energy prices have gone down, then our research sheds light on just how many small businesses have been overlooked as they are entangled in high fixed tariffs.”

Tina added, “It’s disheartening to see a significant proportion of small firms could be forced to close, downsize or radically restructure their businesses just when we look to grow our economy. Our community shrank by 500,000 small businesses over the two years of COVID; we shouldn’t now be adding any more to that gruesome tally.

“The least energy suppliers should do is to allow small businesses who signed up to fixed tariffs last year to ‘blend and extend’ their energy contracts, so that their bills are closer to current market rates. We’d also like to see the Government and Ofgem support this initiative.

“There are signs that small businesses may be about to turn a corner after last year’s downturn. Giving small firms a way out of last year’s market peak rates will accelerate the progress to recovery.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.