A growing number of small businesses are complaining about hugely inflated ongoing charges on top of their standard energy bills, some as much as 13 times the level of three years ago.
The Federation of Small Businesses (FSB) has written to Ofgem, urging it to act on the rapidly growing permanent charges paid by small businesses, especially those in rural areas.
A business owner contacted the group to report an increase in standing charges, from 70.94p per day in July 2021 to 969.64p per day in September 2023, more than 13 times higher .
Permanent charges are applied daily, regardless of how much energy the customer uses, and are used to cover the cost of supplying energy to homes and businesses.
They also cover the costs of building new grid infrastructure and maintaining power supply when energy providers go bankrupt.
While consumers’ bills are capped by the energy price cap, small businesses’ bills are not.
Tina McKenzie, policy chair at the FSB, said: “We want Ofgem to do a thorough review of standing charges for both businesses and consumers, for greater transparency and to discern whether energy companies are behaving fairly. with their small clients.
“Small business energy customers behave more like consumers than large businesses, lacking the resources, experience and purchasing power to get the best possible deal from their energy suppliers.
“However, they do not benefit from the same level of protection that households rightfully have, leaving them caught between two stools.
“Many small businesses could be forgiven for suspecting that they have been seen as an easy target for price increases on their permanent rates, and do not have a full idea of where the money they pay every day is going – something that needs to change.” .
Late last year, Ofgem asked for views on the pending charges, prompting more than 20,000 people to respond.
The regulator has said it wanted to open a debate about how the charges work and welcomed views on how to change the system.
Ongoing charges are typically higher in rural areas, where the cost per household to the energy provider is higher.
The FSB said this meant the charges disproportionately affected businesses in rural areas.
This is exacerbating the divide between rural and urban areas, the group stated, and “[undermines] efforts to level up more remote parts of the UK.”
The PA news agency has contacted Ofgem for comment.