Nearly a quarter of SMEs trapped in fixed energy contracts

With the Energy Bill Relief Scheme having just come to an end, there are calls for SMEs to be allowed to renegotiate their fixed energy prices from last year.

Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB), explained, “The cliff-edge we’ve been about warning for months is sadly here – tens of thousands of small firms are now at an existential risk as government energy support will largely downscale to a scheme that offers almost no help from tomorrow (Saturday 1^st April).

“From cafes and pubs to salons and convenience stores, small firms that fixed their energy contracts last year will see their bills rise by three or even four-fold as prices revert back to high prices and to pre-Energy Bill Relief Scheme level.

“We found that 24% of small firms are trapped in fixed contracts, and of them, 28% say they could be forced to downsize, close or restructure their businesses. This equates to 370,000 small businesses, and not to mention the jobs and communities which depend upon them.”

Tina added, “But there’s still time to cut the pain and pull these firms back from the cliff edge. By allowing small firms that are caught in fixed and high prices to renegotiate and ‘blend and extend’ their energy contracts will enable them to come out from the high fixed price with their energy suppliers and agree to a new fixed term contact that resembles the lower prices that we see at the moment.

“Added cost pressures can’t be easily absorbed by small firms which have little to no cash reserves, while customers can’t afford to have these price increases passed on in full.

“Giving small firms the option to blend and extend their fixed energy contracts could avoid unnecessary inflation. Let’s not forget these small businesses are the ones that pushed through Covid and the energy crisis in winter despite their very limited resources. These firms deserve a fighting chance this year.”

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