News & Insight

Small businesses pay 150% as much as big businesses on their energy bills.

Oliver Jones

Ofgem's announced that small businesses pay 1.5 times as as large ones on their energy.

The UK's energy regulator has just announced that small businesses are paying 1.5 times as much for their energy as larger companies­.

Ofgem’s The State of the Energy Markets report, released on October 31st, shows big businesses getting better deals with their suppliers, while small firms get stuck in expensive contracts which are rarely switched.

The small business market is currently the least competitive energy market, with 58% of businesses admitting they have never switched suppliers.

If you're a small or micro business, you probably need to think about switching your contract ASAP, as the majority of you (60%) are on poor value deals, which can be as much as £300 more expensive as the best deals available.

Why are small businesses so reluctant to switch?

Business customers have a limited time window during which they can announce their intention to switch and renegotiate their contract, and without staff dedicated to managing their bills, many struggle to complete the forms in time.

That said, switching is likely to get easier in the near future, as No-exit clauses and termination fees for rollover contracts have been banned. That means a supplier can’t penalise you for wanting to leave a contract which has been rolled over automatically.

Other energy trends:

  • The Big Six share of the market is down to 80%, as smaller companies (XLN among them) enter the market.
  • Households are using one fifth less energy than a decade ago, which limits market growth. This is mostly due to improved energy efficiency, but consumers are also rationing their use of heating to cope with the price rises.
  • Teresa May has announced a price cap on energy, predicted to roll out in 2019 – but Ofgem warns that the Bix Six will respond by removing their cheaper fares and pricing just under the cap.