Rollover Energy Contracts for Microbusinesses: New Protection Announced
On the 27th July 2017, new measures took effect to protect microbusinesses from expensive rollover energy contracts.
Dermot Nolan, the Chief Executive of Ofgem hailed the updates as a big change in the way the market works
During a two year Competition and Markets Authority investigation into the energy industry, it was discovered that 45% of microbusinesses were trapped in costly default energy tariffs meaning 45% of microbusinesses were overpaying their business energy supplier.
Find out more about the investigation into microbusiness rollover energy contracts here
As a result of these findings, energy suppliers were urged to stop locking microbusinesses into rollover contracts and ensure information regarding comparisons and alternative options is clearly stated on their websites to promote change.
Furthermore, UK energy suppliers were also ordered to allow small businesses to leave their rollover tariff without incurring exit fees.
The CMA believes that these changes could help microbusinesses save up to £180M per year, which is fantastic news for microbusinesses!
What is classed as a microbusiness?
The European Commission defines a micro-business as a company that has less than ten employees and a turnover of less than 2 million.
According to statistics from the Department for Business, Enterprise and Regulatory Reform, in January 2006 95% of the 4.4 million SMEs in the UK had fewer than 10 employees. This shows that a high proportion of UK businesses are microbusinesses.
What is a rollover energy contract?
When you fail to update your contract before its termination date, you are automatically rolled onto a standard rate tariff. This is often much higher than your previous tariff – not good news if your business is on a budget!
If you want to find out more about rollover energy contracts, click here.
Unsure if your business is protected against microbusiness rollover energy contracts?
If you are still unsure if your business is protected by the new regulations, get in touch with one of our business energy advisors on 0800 977 7000.
We can help you to identify if your business is protected by the new market changes or help you to re-evaluate your existing rollover energy contract if your business has already gone out of contract.
We are here to help, so please do not hesitate to give us a call to find out more.
Will there be any further developments on rollover energy contracts for microbusinesses?
“We are considering what further steps could be taken to protect and help these business customers engage in the market as part of our wider programme to make sure all consumers business and domestic get a better deal.” Dermot Nolan, Chief Executive of Ofgem.
This is great news for everyone! Further measures to create more transparency and competition in the energy market is nothing but good news for your business.
Want to see how much your business could save on a different tariff?
Even if your business is not a micro business, or you haven’t gone out of contract, there is no harm in seeing how much you could save with Exchange Utility.
The best time to choose a new contract is before your existing one runs out, so make sure that you act before that dreaded contract end date!
Complete the enquiry form below to start comparing today.