The letter highlights that the businesses we represent, which have been severely impacted by the pandemic and the increasing cost of living, are being taken advantage of.
Eight leading industry groups, including UKHospitality, Care England, and the British Retail Consortium, among others, have come together to address the unchecked problem. They argue that it is unjustifiable for Ofgem to demand transparency on energy broker fees for micro-businesses while neglecting the same requirement for larger SMEs and organizations.
One compelling example, provided by Box Power, an energy consultancy, found that a commission fee of £12,000 was applied to a £49,000 contract for one of the 16 care homes operated by a provider serving up to 1,200 patients in total. This clearly demonstrates how unscrupulous brokers are exploiting vulnerable businesses, ultimately driving up prices for customers unnecessarily.
While legislation has already been introduced to ensure transparency for micro-businesses under Supplier Licence Conditions, Box Power CIC, along with the other signatories, argue that the regulator has neglected their responsibilities toward other firms and organizations.
The letter states, “We do not agree that larger businesses are able to look after their own interests, that just because this is a long-standing arrangement that it should continue, or that Ofgem is best placed to address issues affecting micro-businesses only.”
Uniquely in the UK, Box Power reinvests all its profits into good causes and has donated £800,000 to local and regional charities in 2021.
Corin Dalby, the CEO of Box Power CIC, who spearheaded the letter, stated that if Ofgem fails to take necessary action, they will bypass the regulator and seek assistance from the government.
Energy brokers have been utilized by businesses and industries for many years, and the issue of hidden charges is not a new phenomenon. However, this is the first time leading bodies have united to condemn the situation and demand immediate reform, driven by the escalating cost of living and the mounting pressures faced by their members, such as soaring inflation and reduced profits.
Those who rely on brokers may be burdened with thousands of pounds in extra charges due to exorbitant commission fees.
Andrew Goodacre, the CEO of the British Independent Retailers Association (BIRA), emphasized the paramount importance of transparency in energy bills and associated costs. He stated, “The recent significant increases in the cost of energy have made this even more important.”
Muntazir Dipoti, the national president of The Fed, underscored the critical role played by independent convenience retailers within their communities. However, with surging business costs, many Fed members are struggling to stay afloat. Dipoti emphasized, “It is, therefore, critical that Ofgem takes action against these hidden charges to prevent even more retailers from suffering substantial financial losses.”
In conclusion, it is imperative to address the issue of hidden charges and ensure transparency in energy bills for businesses. The collaboration between these prominent industry groups serves as a strong advocacy for urgent reform in light of the escalating cost of living and the hardships faced by businesses across various sectors.