David Cameron is aiming to prevent energy companies from automatically rolling SMEs onto more expensive electricity and gas tariffs when their fixed-term deals expire, The Times reports.
The prime minister called for EDF Energy, ScottishPower and E.ON to end this practice, warning that it “can lock small companies into paying above market rates”.
Automatic rollover has ‘long concerned’ the prime minister
In a letter to SSE, welcoming its decision to end automatic rollovers for SMEs, he wrote: “I have for a long time been concerned about this … I very much hope that other companies in the industry will follow your example.
“I will be writing to them shortly, if we do not see progress.”
Cameron added that dealing with energy costs and the time it takes for new firms to be connected, have been high on his to-do list.
The Federation of Small Businesses reports that a quarter of small companies’ energy contracts have been rolled over into new fixed-term deals without their knowledge. Not only does this mean they miss out on a better deal, but they also miss the opportunity to switch to another provider.
Vast majority would like to see the practice abolished
Almost eight out of ten companies voiced their opinion that energy companies should abolish this practice.
The news comes after the government set up a working group in a bid to gain voluntary agreements from the industry to give their SME customers a boost.
These proposals included ending roll-over contracts and limiting the amount of time a SME can be back-billed to a year.
British Gas was the first of the big six to abolish the automatic rollover of energy contracts for SMEs, with this set to occur in September.
In response, E.ON called for an industry-wide ban on the practice, but said it would not eliminate them itself until the other companies had all promised to do the same.