For all businesses, energy bills are an additional cost they need to manage, but for small and medium enterprises (SMEs), the costs can be an even heavier burden – and government figures show that 99.3 per cent of businesses in 2018 were SMEs. It is essential to support the growth of those small businesses that are the lifeblood of Britain’s economy.
As one of the UK’s third-party intermediaries (TPIs), Make It Cheaper has witnessed an increase in microbusinesses engaging in the market and switching energy suppliers. But bills are still higher than they need to be and it is vital we invigorate this market even further. TPIs are ready and able to drive this change.
While best practice and innovation in the market is already leading to higher engagement, the regulator has a crucial role to play in enabling this. While consumer confidence in TPIs must continue to be built by the investment and actions of the TPIs themselves, this must be underpinned by a strong regulatory framework.
To this end we welcome Ofgem’s strategic review of the market and have used our response to the review to call on Ofgem to take swift and effective action to strengthen regulation to protect small and micro businesses.
We’ve worked with business groups, run focus groups with small business stakeholders and learnt from our experiences. This has led us to propose three improvements Ofgem should introduce, which are all transparent, simple to implement, and pro-competition.
First, Ofgem should use this review as an opportunity to extend Midata to the microbusiness energy market. Midata has gained significant momentum in the domestic retail market, and microbusinesses should not miss out on this. Being unable to have control of and access to their own data means microbusinesses are operating blind, making it difficult to make informed decisions. Introducing Midata would streamline the switching process, enable accurate tariff comparisons for these consumers, and improve consumer choice.
Second, the regulator should allow microbusinesses to delegate authority to TPIs to create a smoother switching and contracting process. Currently, some suppliers do not prioritise quick response times or refuse to deal with TPIs acting on delegated authority. Giving business consumers the right to let TPIs move them between suppliers would reduce the burden of switching.
Finally, it is essential that Ofgem introduces a strong Code of Practice with input from industry and other stakeholder groups. Work is already under way on this by industry participants and Electralink – this could act as the basis of Ofgem’s future approach to regulation.