Call free 0808 164 2222

troo blog.

The energy market isn’t working

03/05/2019

blog-image

It should be easy to compare business energy prices, find a better rate, and switch supplier. But is the energy market working the way it should?

Deregulation always comes with promises of competition and lower prices for consumers – and the energy market deregulation was no exception.

But in practice, this is what happens:

  • Suppliers raise prices
  • Consumers don’t switch
  • The benefits of deregulation take a long time to kick in

Consumer behaviour takes a long time to change. Thirty years after the Electricity Act, consumers have finally begun to switch their suppliers in earnest.

But that brings its own problems.

A report by Which? last week states that energy switching complaints are on the rise, with over 3000 complaints made to the Energy Ombudsman in 2018.

It still isn’t easy to resolve billing issues with suppliers, and it can be impossible to transfer a smart meter to your new supplier. Nobody is going to get a new smart meter every time they switch. And, while switching is now the biggest source of complaints facing suppliers, customer service is still an issue for many.

Businesses have it worse

The domestic market has issues, but businesses are facing even bigger energy problems:

1. Unscrupulous energy brokers

As if dealing with energy suppliers wasn’t enough, businesses also have to put up with energy brokers.

Energy brokers typically employ themselves as honest partners for small businesses, with access to special prices from suppliers that only they can quote.

That isn’t true.

All energy suppliers operate from a single pricing book. None of them run a separate pricing book for energy brokers. Your energy broker is quoting you a different price because they’re adding their own fees and commissions to your unit rate.

And they don’t disclose how much extra they’re charging you.

Sign up to a five year deal with an energy broker and you’ll be paying their commission every time you turn on the power.

We don’t think that’s fair. It certainly isn’t right.

As if that weren’t enough, energy brokers also employ a number of hard sales tactics when they’re trying to convince you to sign up for one of their deals. They’ll tell you that they can only hold a price for a certain time period (not true) and that their prices are high thanks to changes in the wholesale market (unlikely).

We could go on and on about energy brokers and how badly they’re hurting British businesses. Click here to read about some of the dirty tricks energy brokers will employ to sign you up with their preferred supplier (they rarely search the whole energy market to find you the best price).

How do energy brokers get away with this?

It’s all down to our next point:

2. A complete lack of regulation

The United Kingdom isn’t exactly ‘a nation of shopkeepers’, but there’s no doubt our economy is powered by small business: in a 2015 government survey, 99% of British businesses were classed as SMEs with 0-249 employees. Theresa May has even called SMEs ‘the backbone of our country’.

Yet despite this, the UK’s businesses have no protection when dealing with energy brokers.

Energy brokers aren’t regulated.

They don’t need a license to operate.

And there isn’t even a voluntary code of principles in place to separate the decent-ish brokers from the dreadful.

That means every business in the UK is exposed to hidden fees, unfair price hikes, and fraudulent sales practices when dealing with energy brokers.

On top of all this, many energy brokers are small organizations with poor IT infrastructure and CRM facilities, which means that they can’t keep track of your renewal dates to any great extent.

And if that doesn’t sound like such a big deal, wait until you read our next point.

3. Unfair auto-renewals

If Microsoft increased their prices by 80% the next time your contract renewal came around, you’d certainly notice it on your bank balance. You might even think about switching to Google.

Would you notice if your energy costs went up that much?

A lot of businesses don’t. Up to one third of businesses don’t know what percentage of their annual costs are spent on energy. And over 500,000 businesses are paying up to 80% more than they should.

All thanks to auto-renewals and something called ‘deemed rates’.

Every business has an energy supplier, and every business signs an energy contract. Those contracts have an end date. If you don’t pay attention to that end date and secure a replacement contract, you’ll end up on deemed rates.

(You can also end up on deemed rates when you move into new premises and consume gas and electricity without agreeing a contract with the supplier.)

Deemed rates can be up to 80% higher than contracted tariffs.

We don’t need to tell you that’s a serious shock to your bank account.

And if you’re relying on your broker to keep you up to date on it, you could be in for a nasty shock.

Do you know when your energy contract ends?

If you don’t know, don’t worry. You’re not alone. It’s easy to lose track when you’re busy.

(Paying a penalty because you’re successful? That’s not fair.)

It all adds up to a serious disadvantage for businesses

In 2018, the Competition Markets Authority reported that UK businesses are collectively losing £500,000,000 every year thanks to bad energy deals.

When it comes to businesses, it’s pretty clear:

The energy market isn’t working.

We’re playing our part

Here at troo, we know that your energy supply is an essential part of your business. After all, you wouldn’t be reading this without electricity.

You can’t operate without energy. That’s a fact.

But here’s another fact:

The energy market is hard to navigate when you’re not an expert. Energy suppliers don’t make it easy, and energy brokers confuse things even more.

That’s why we are:

  • Actively pursuing regulation for energy brokers and working with ElectraLink to develop a code of principles – so that you can be confident in the service you’re receiving
  • Changing the way the business energy market operates – with troo, you can benchmark your current energy contractsfor free, find the best deals out there, then let suppliers bid for your business before you choose a contract

And with troo Assure, you’ll have a dedicated team of energy professionals on hand to deal with all of your energy problems – and help you switch energy supplier, hassle-free.

Find out more about troo Assure here.

back to all blogs

troo