Water-regulator Ofwat is set to launch a six-week consultation on proposed changes to retail price caps for smaller businesses.
The proposals include a national price cap for small businesses – categorised as businesses that consume less than 0.5Ml per year – aimed at simplifying price caps that are currently measured on a regional basis.
If adopted, these changes could lead to final bills for business customers on a dual metered tariff increase by around 0.1% before inflation. The regulator noted that the measures were likely to see both rises in falls in retail price caps across the country.
The proposals will be of particular importance with businesses expected to come under increased strain during the winter months amid high wholesale gas prices. The consultation also comes off the back of the 80% rise in the consumer energy price cap.
“This is the first time we have done a thorough review of retail costs to serve smaller business customers,” Georgina Mills, business retail market director at Ofwat said.
“Competition is working less well for smaller business customers, so our proposals aim to protect these customers whilst supporting a sustainable market where efficient retailers can earn a fair return.”
When Ofwat last reviewed these price caps in 2018/19, it committed to another review in 2-3 years’ time. The consultation will be open for responses until 14 October 2022.
Implementing the changes could help support businesses around the UK as utility bills soar, with many industry experts calling on the government to provide further support.
Last year, Octopus Energy poached Ofwat CEO Rachel Fletcher as director of regulation and economics.
Fletcher had been CEO of the water regulator since 2018, working to make the company more environmentally sustainable and resilient.
Before Ofwat, she worked at Ofgem for 15 years in a number of roles including head of retail, having joined from multinational PwC in 2005, where she worked as an energy consultant.