Microbusiness Energy Market – Are You Paying Too Much?
The Microbusiness energy market is worth up to £3.5 billion at present, but several smaller firms are facing augmented issues, which has led to Ofgem launching a review. The regulator is concerned that these businesses are struggling to engage with the current market, and are paying more for their energy than they should be.
Firstly, it’s useful to establish what a microbusiness actually is. A business is classed as a microbusiness if it employs less than 10 members of staff and has an annual turnover of nothing greater than £1.7 million. Furthermore, they are only classed as such if they use no more than 100,000kWh of electricity per year, and no more of 293,000kWh of gas.
Last year there were more than five million microbusinesses in the UK, which accounted for a third of employment and a vast 21% of overall turnover. They paid, in total, a figure of £3.5 billion in gas and electricity bills, which is a further indication of just how big the market is, and the impact they have on the overall working population.
One of the key current issues for microbusinesses is that there is limited accessible information, meaning it can be extremely difficult for them to find a better deal. This is something that Ofgem is looking into.
It is not all negatives however, as following the Competition and Markets Authority’s recommendation in 2017, it has become clearer for microbusinesses when they are looking for price information. This is through quotation tools on suppliers’ websites, and on price comparison sites. Despite this improvement, the level of engagement has barely moved and it has still failed to address many of the fundamental issues that have been found within the market.
This has led to this further review being undertaken, details of which will be released in the latter stages of the year, following a period of information and evidence, which runs until the end of June.
Anthony Pygram, who is the Director of Conduct and Enforcement at Ofgem has also stated that “Microbusinesses are the backbone of the country’s economy. Yet too many are still finding it hard to navigate what is a complex and at times opaque market to get a better energy deal and are suffering significant consumer detriment as a result.
“Our review announced today, combined with our continued work with the government and industry, aims to deliver a properly functioning competitive retail energy market which works for all microbusinesses.”
This is the clearest indication yet, that things are now being done in order to address the clear issues at hand for microbusinesses and their use of energy.
