Business suppliers warned over ‘excessive’ charges

Ofgem is considering introducing additional regulations on non-domestic energy suppliers following reports their consumers are facing “excessive” charges and poor service.

In a letter to the chief executives and directors of regulation of all non-domestic suppliers, Ofgem’s director of retail Neil Lawrence said the regulator is “concerned about repeated reports about potential detriment that business customers are currently experiencing”.

Lawrence listed a series of issues that have been raised with the regulator following engagement with consumers, which he said may also impact a number of domestic consumers who receive their energy via a non-domestic contract:

• A lack of offers for customers rolling off their existing contract and for new connections, which has led to an increase in customers on more expensive deemed contracts
• Excessive security deposit requirements that “appear unreasonable in the circumstances” and can make it impossible for firms to agree a contract when offered
• Excessive risk premia being added to contracts
• Excessive charges for deemed rates that “appear to potentially be non-compliant” with licence conditions by being “unduly onerous”
• Customers being unable to easily contact their supplier and receiving delayed response to their enquiries
• Unacceptable practice during debt and disconnection activities, including unreasonable demands and poor conduct towards customers
• Concerning increases in standing or management charges at the same time the Energy Bill Relief Scheme is being rolled out, creating concerns that the scheme is facilitating the addition of unreasonable premiums to charges

Lawrence added: “We understand that suppliers may be managing increased market and bad debt risk. However, suppliers should not profit from the current state of the market in a way that negatively impacts customers and must not subvert the intent of the Energy Bill Relief Scheme.

“We are reviewing our options to introduce additional regulations to protect all non-domestic consumers.”

Lawrence said Ofgem considers it urgent that each supplier responds with views on the issues raised and the actions they have taken to protect business customers.

The regulator also plans to issue a best practice guide on debt and disconnection practices by the end of November to clarify the sort of behaviour it expects suppliers to follow in this area.

“We trust this will be helpful as you manage what will likely be a difficult winter for many business customers,” Lawrence added.