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SMEs overcharged by £280 million per year for energy costs, CMA report finds

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Small and medium-sized enterprises were overcharged for their gas and electricity by as much as £280 million a year between 2007 and 2014, a damning report into the energy market has found.

The Competition and Markets Authority published the provisional findings from its energy market inquiry this morning, and found that the ‘Big Six’ energy suppliers had failed to engage with SMEs and microbusinesses regarding their energy bills and consumption.

This, the CMA found, had been to the “significant detriment” of business customers in the UK, and contributed to an average 6% of Big Six revenues throughout the period.

Central to this overbilling was a failure to properly encourage SMEs to change their consumption patterns through the introduction of half-hourly settlements.

While energy bills are settled half-hourly, until recently most meters have not been capable of recording half-hourly consumption rates. The CMA claimed that suppliers had not been properly incentivised to encourage this, and exploitative pricing policies had become the norm as a result.

The report lists a number of proposed remedies to end the detriment faced by businesses, including increased price transparency for business customers, an end to auto-rollover contracts and the launch of an information programme to help boost engagement between business customers and suppliers.

Energy secretary Amber Rudd said that the report was a “wakeup call” for the Big Six.

“Energy customers should get a fair deal from a market that works for them. That’s why we called for the biggest ever investigation into the energy market and won't hesitate to take forward its recommendations.

“This report goes hand-in-glove with everything this government is doing to deliver a fair, competitive energy market that puts the families and businesses paying the bills first and the power back in their hands,” she said.

Juliet Davenport, founder and chief executive at independent supplier Good Energy, meanwhile said that the measures proposed in the report would “mean customers get a better deal”.


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