Micro Businesses at Risk of Being "Cut Off and Ripped Off" by Energy Suppliers

Citizens Advice has raised the alarm about the mistreatment of micro businesses by energy suppliers and called for more protections for small commercial buyers of energy.

The UK’s 1.5 million micro businesses are not guaranteed the same protections as domestic energy customers. This results in them being needlessly disconnected from their energy supplies, aggressively pursued for debts, and mis-sold contracts by brokers, the consumer watchdog has claimed.

The “Closing the Protection” gap report found that while regulations require the suppliers to exhaust all options before disconnecting domestic energy customers, they can much more quickly cut off the supply of businesses.

And while domestic customers in debt to their supplier receive some protection, under Ofgem rules about back-billing and assessed ability to pay, micro businesses don’t have the same security. Many are being aggressively pursued for debts to their energy supplier.

Citizens Advice received 3,480 complaints about debt-related issues from micro businesses between June 2018 and May 2019.

Micro businesses also complained to the charity that they were pressured by aggressive brokers into signing up to energy contracts and were given little transparency about the broker’s fees or how many suppliers they’d sought quotes from.

Businesses are micro businesses under Ofgem definitions if they either employ fewer than 10 full time employees and have an annual turnover of less than €2 million; use no more than 100,000 kWh of electricity per year; or no more than 293,000 kWh of gas per year. 96% of UK businesses meet at least one of these criteria, entitling them to some protections under Ofgem rules.

But Citizens Advice says existing protections for micro businesses don’t go far enough and are calling on the regulator, government and industry to “close the protection gap.”

Specifically, Citizens Advice is calling for improved debt and disconnection processes for micro businesses and stricter regulation of energy brokers and other third party intermediaries, including mandatory transparency about the commission they earn.

Citizens Advice chief executive Gillian Guy said: "Microbusinesses should not face the prospect of being cut off or ripped off because of a lack of consumer protections.

"The regulator, industry and Government needs to do more to support the shopkeepers, sole traders and entrepreneurs who make up a large number of UK businesses and close this protection gap."