Utility Bidder has been involved in the consultation process of Ofgem’s recent microbusiness strategic review. The leading energy brokers have shed light on the challenges faced by the microbusiness energy market.
Ofgem, the independent energy regulator for Great Britain, recently conducted a strategic review of the microbusiness energy market. Microbusinesses play a central role in the UK economy. According to government data, there were over five million microbusinesses in the UK in 2018, accounting for a third of employment and 21% of turnover.
However, Ofgem had concerns that some microbusinesses were struggling to engage with the market and were paying more for their energy than they should.
The initial analysis from the review showed that market information within the industry is often inaccessible, resulting in customers paying high prices and failing to make informed decisions.
They concluded that the energy market isn’t working as well as it should for these customers, and their evaluation of the CMA’s price transparency remedy suggested that wider issues remained in the £3.5 billion microbusiness energy market.
In an effort to seek further views and evidence on the challenges microbusinesses face, Ofgem conducted a survey with leading business energy brokers to understand suggested measures and changes. Utility Bidder was one of these energy brokers, who have come together alongside other industry leaders to create stronger services for microbusinesses, and highlight the areas that could pose as a threat to customers and the industry.
Chris Shaw, CEO of Utility Bidder, comments:
“Utility Bidder is a leading energy broker, helping small and microbusinesses find the best prices for their gas, electricity, water, and telecoms supplies.
“We help reduce costs for hard pressed businesses. We interact with approximately 60,000 microbusiness customers a year and have been in contact with over 300,000 microbusinesses – across all sectors of the economy – over the last ten years.
“We are committed to improving standards across the sector, and welcome Ofgem’s current Strategic Review of the Microbusiness Energy market.”
Question from Ofgem: What are the most effective ways to ensure that microbusinesses can access key information about the retail energy market?
“Brokers have an essential role to play in helping microbusinesses access key information about the retail energy market. We believe that brokers have had a positive role in enabling switching in the market, as they help microbusinesses identify and negotiate the best deals suited to their needs.
We are committed to the highest standards across the sector. Ofgem’s proposals on transparency and standards are likely to make further progress in improving outcomes for small and microbusinesses, ensuring businesses like Utility Bidder can continue to help microbusinesses find the best deals on the market.”
Question from Ofgem: Do you agree with our proposal to require that suppliers disclose the charges paid to brokers as part of the supply contract, on bills, statements of account and at the request of the microbusiness customer?
“…Brokers play a critical role in driving engagement in the market, and while we fully support fee transparency to customers, we firmly believe that this is activity that the broker, and not the supplier should undertake.“
“We would encourage Ofgem to ensure that these transparency measures apply to all possible marketing channels that suppliers may use, not just brokers, in order to achieve a level playing field.”
Question from Ofgem: What do you think the impact of our proposal to introduce a broker conduct principle will be? Are there any particular reasons why suppliers/brokers couldn’t achieve the broker conduct principle?
“We wholeheartedly support Ofgem’s proposal in this area. We believe that it is a positive measure for all parties and can see no reason as to why a supplier or broker could not achieve the conduct principle”
Question from Ofgem: Do you agree that our proposal to introduce specific sales and marketing requirements on suppliers and the brokers they work with is important to help customers make more informed choices and increase trust in and effectiveness of the market? If so, do you agree that face-to-face marketing and sales activity should be covered alongside telesales activity under these proposals?
“We agree with Ofgem’s proposal and believe it is an important change to help customers make informed choices, thereby increasing trust and effectiveness in the market. We agree that face to face marketing and sales activity should also be covered.”