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Small and medium businesses paying over the odds for energy

New Ofgem report highlights issue of high energy prices for small businesses

Ofgem believes 150,000 SMEs are on higher rate contracts

Ofgem believes 150,000 SMEs are on higher rate contracts

According to a report published by energy regulator Ofgem, small businesses are paying close to double the standard rate for energy when they move into new premises.

The reason for this is that small companies are often considered bad risk clients, regardless of their previous payment records.

150,000 SMEs paying deemed rates

Although they should only be kept on higher rates for three months before being switched to a standard plan, companies which frequently move premises find themselves frequently paying higher rates.

Ofgem estimates that 150,000 companies are currently paying higher, also referred to as deemed, rates.

Ofgem: We will remind energy suppliers of their obligations

A spokesperson for Ofgem commented: “Since last year, suppliers have been required to tell firms that they are on deemed rates and inform them about more competitive rates available to them.

“We will be reminding providers of this”.

Deemed contracts offer additional flexibility

When This is Money contacted British Gas for a statement, the energy supplier said: “The majority of firms spend only weeks on deemed rates but some choose to stay on the deemed rates because it offers more flexibility than signing up to a contract.

“We always try to help customers move to the right contracts for their circumstances”.

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  • Brian Jones

    This is a practice that should be outlawed as soon as is possible. It is not neccessary to charge such high rates other than the million of pound extra profit it brings in to suppliers. I say extra profit as anything over a standard rate is pure extra profit. Business rates, telephone, rent and telephone are not charged at initial “deemed” rates so why should energy companies. It took me 4 MONTHS to even get a bill out of Opus which then highlighted I had been paying these high rates. Not my fault it took 4 months but Opus kept delaying sending the bill to the right address. Then it took me another 3 months to get the meter changed when it should have taken 2 weeks. SME’s need all the help they can get when they are setting up and these “deemed” rates have actually been so bad to some that it has helped push them OUT of business in the first 6 months. Isn’t it about time Ofgen and the government looked at banning them and doing whats fair to SME’s by giving them the best start they can…..