Smaller UK Businesses “paying twice as much for electricity”

31st October 2017 | Commercial Energy

Average electricity prices are around 50% higher for very small businesses than for large or very large consumers. That’s the findings of Ofgem’s new State of the Energy Markets report, which also reveals non-domestic gas prices can be twice as high.

It suggests retail markets “typically work well” for larger businesses but small and micro businesses pay much more on average for their electricity. That’s because larger business customers can often negotiate good deals with suppliers compared to smaller firms, which don’t switch frequently.

There are currently 60 electricity suppliers, with small and medium firms serving 17% of customers.

Competition is said to be “working well” in wholesale markets where suppliers get their gas and electricity and for “switched-on” consumers who are able to shop around. However, it’s not the same for those who stay on their supplier’s poor value default standard tariffs. More than half (58%) have never switched suppliers or have switched only once.

Paying twice as much for electricity

Around 60% of customers are on these poor value deals for electricity and gas, which can be around £300 more expensive each year than the cheapest fixed term deals, although Ofgem says the number is falling.

The news comes after the government recently published the draft legislation to cap energy prices.

The report stated that energy bills have fallen since their peak in 2013 but are higher than they were 10 years ago. An independent review by Professor Dieter Helm recently revealed UK householders and businesses are paying too much for energy as a result of the government’s green taxes.

The average duel fuel bill for a customer of the Big Six was £1,123 last year – 16% lower compared to three years ago. However, this year all of the largest suppliers increased prices.

Charges in energy bills affect consumers on low incomes the most, with them spending 10% of their expenditure on energy – more than three times more than the proportion spent by households with the highest incomes.

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