Micro businesses are at greater risk of having their energy supply disconnected than the average household, and of exploitation by unscrupulous energy brokers, due to a lack of protections in the microbusiness market, according to a new report from Citizens Advice.
Microbusinesses are hugely diverse and range from pubs and convenience stores to sole traders. The largest suppliers (who supply approximately 90% of the microbusiness market) providing supply to circa 1.3M electricity and 0.5M gas microbusiness meter points.
The report, Closing the Protection Gap, says there is evidence of them being needlessly disconnected, aggressively pursued for debts and mis-sold contracts by energy brokers. It notes that if a domestic customer falls behind on their energy bills, their supplier must exhaust all other options before disconnecting them. The same protection does not apply for microbusinesses – although some use the same energy supply, such as. a flat above a shop.
Citizens Advice says its Consumer Service and Extra Help Unit received 3,480 complaints from microbusinesses about debt related issues between June 2018 and May 2019. Common complaints about brokers include pressure to agree contracts, limited transparency on fees and brokers misrepresenting how many suppliers they speak to. When an energy supplier fails microbusinesses may lose credit balances and deposits.
Citizens Advice says:
The government should introduce stricter regulation of energy brokers and other third party intermediaries (TPIs) .
Energy brokers and TPIs should be transparent on commission, market coverage and any fees should appear on bills.
Industry should improve debt and disconnection processes for microbusinesses.
Ofgem should protect microbusinesses’ credit balances if their suppliers fail.