The Federation of Small Businesses has accused certain energy suppliers of exploiting small firms through drastic increases in standing charges, with reports of fees skyrocketing up to 12 times.

The Federation of Small Businesses (FSB) has raised concerns over soaring standing charges imposed by some energy suppliers, alleging that these increases are contributing to inflated bills for small firms.

In response to a recent consultation by Ofgem on the standing charges system, FSB highlighted grievances from its members, citing alarming rises of up to 12-fold in fixed fees, irrespective of energy usage.

The FSB reported that an auto parts business in Dorset faced a 12-fold surge in standing charges, escalating from 70p to £9.69 per day over two years.

Similarly, a Highland tech firm experienced a significant spike from 32p to £7.50 per day, resulting in an annual increase of £2,500 in energy costs.

The FSB proposes greater transparency in suppliers’ standing charge calculations, exclusion of costs related to the supplier of last resort acquisition and collaborative efforts between Ofgem and energy suppliers to narrow the standing charge discrepancy between rural and urban areas.

FSB National Chair Martin McTague said: “Energy suppliers have some explaining to do on the sudden and dramatic hikes in standing charges, which become a regressive form of billing that hamper small business growth, confidence and investment.

“Even now that the wholesale energy prices have come down from the peak we saw in 2022, small businesses are still scratching their head over skyrocketing bills.

“While parts of the standing charges are being reinvested into green and energy efficiency measures, there’s little to no clarity on the cost make-up, and small businesses are forced to pay the increases with no options and explanations from their energy suppliers.”

An Ofgem spokesperson told Energy Live News: “We know that standing charges have provoked a huge amount of debate in recent months, with different balances to be struck, which is why we opened this call for input, and more than 40,000 people have responded to share their views.

“We’ve heard from businesses of all sizes and other non-domestic services ranging from church halls to sports centres that energy bills continue to be a crucial issue. We will now use these responses to inform how we approach this complex issue and set out next steps in due course.”

A new report indicates a lack of data on direct and indirect emissions and renewable energy use, with less than a third having dedicated environmental committees on their boards.

Nearly 4% of surveyed small and medium-sized business (SMB) leaders can provide data on their companies’ direct and indirect emissions (scope 1-3).

That’s according to new research sponsored by EY and conducted by YPO, which shows a “significant” gap in environmental measurement practices among SMB leaders.

Additionally, almost 5% of small businesses measure their businesses‘ renewable energy use, according to the survey.

The study highlights potential resource and understanding challenges among SMBs, with less than a third having social and environmental committees on their boards and only 27% having a full time sustainability leadership position.

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Almost a quarter of UK businesses considering government energy support as essential for survival, according to a new survey.

Nearly 81% of UK businesses anticipate increasing prices in response to high energy costs in the next two years.

According to a new survey conducted by PwC, a quarter of organisations deem government energy support crucial for survival.

Over the past two years, 77% of businesses experienced a moderate to significant impact of high energy costs on the prices of their products and services, with 67% citing a negative effect on profits and margins.

Looking ahead, 81% expect further price hikes and 72% anticipate a negative impact on profits due to high energy prices.

The survey, encompassing 750 UK organisations from both the private and public sectors, highlights the economic challenges posed by high energy costs.

Barriers to mitigating these costs include a lack of immediate solutions and environmental considerations, each cited by 63% of respondents.

While organisations prioritise objectives like reducing energy consumption, carbon emissions and energy costs, the survey indicates a division in energy strategy objectives.

Efforts to mitigate costs include reviewing energy procurement strategies, improving energy efficiency and adopting corporate power purchase agreements.

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The decision, effective from 29th March 29, follows consultations and includes adjustments to licence thresholds.

Ofgem has expanded profit reporting obligations to smaller energy suppliers.

Effective from 29th March 29, these changes aim to enhance transparency in the energy market by modifying the Consolidated Segmental Statement (CSS) reporting conditions.

Following stakeholder consultations, Ofgem has lowered domestic and non-domestic threshold levels, removing the requirement for a generation license.

The domestic threshold levels have been lowered to 50,000 or more meter points in gas or electricity, while for the non-domestic market, the threshold is reduced to ten or more meter points.

Suppliers reaching the threshold in the last month of their financial year will now be obligated to submit a CSS.

Ofgem emphasises the importance of this reporting in providing a top-level view of companies’ energy supply profitability.

Experts caution against potential global impacts on energy markets due to escalating tensions in Yemen, citing a temporary surge in oil prices and disruptions to trade routes.

An industry analyst has issued a stark warning about the potential risks facing global energy markets amidst escalating tensions in Yemen and the Red Sea.

In an interview with Energy Live News, Ricardo Evangelista, Senior Analyst at ActivTrades, highlighted that the escalating tensions have led to a temporary rise in oil prices, surpassing $80 (£63.1) per barrel.

Ricardo Evangelista said: “With some of the world’s main shipping operators confirming that the region is now a no-go area, transport of goods from Asia and oil from the Gulf region to the West will be done via the lengthier and more expensive Cape route.

“With approximately 12% of global trade passing through the Suez channel, the timing for the global economy could hardly have been worse.

“If the conflict is not resolved soon, global prices will increase because of higher transportation costs. At the same time supply chains, some still recovering from Covid-related disruption, will also suffer.

“Against this background, this is a conflict that may impact the UK and the rest of the globe, hindering the fight against inflation and potentially forcing central banks to keep restrictive policies for longer.

“Such a scenario would be likely to reduce risk appetite, affecting stock markets and benefiting safe havens such as gold and the Swiss franc.”

Centrica has partnered with The Pirbright Institute to implement an on-site technology plan aimed at reducing net energy use by over 10% by 2026.

Centrica Business Solutions has partnered with The Pirbright Institute to implement sustainable on-site technology, aiming to reduce its net energy use by over 10% by 2026.

The installation of a Combined Heat and Power Plant (CHP) by Centrica is predicted to supply around 75% of Pirbright’s future power needs.

This CHP utilises natural gas for generating electricity and hot water, with exhaust gases feeding into a heat recovery generator, providing steam.

This technology is more than twice as efficient as conventional power sources, reducing reliance on the grid, the company said.

The Pirbright Institute, focused on infectious diseases in farm animals, has initiated an energy plan incorporating energy saving upgrades, closure of energy inefficient buildings, efficient lighting, and a staff awareness programme.

By 2025/2026, they aim to decrease net energy consumption by 12.5%, saving nearly £700,000 annually.

The Pirbright Institute (Image: Centrica Business Solutions)

The energy regulator aims to address customer concerns about fixed daily fees and explore potential changes to the system.

The energy regulator Ofgem has received a significant response to its call for views on standing charges, reflecting customer frustration over the fixed daily fee.

Ofgem reported that 20,000 people have participated in the consultation, which closes later this Friday.

Energy customers currently pay a fixed daily charge covering supply connection costs. However, discontent has grown over rising fees and customers’ inability to reduce payments.

Charges vary by location, with most areas experiencing a doubled charge over the last two years.

A standard household incurs a daily charge of 53p for electricity and 30p for gas, contributing £300 to the annual total bill.

These charges, capped by the regulator, also contribute to covering other costs, such as dealing with supplier failures.

Ofgem urged billpayers, charities and businesses to provide their perspectives, resulting in a response.

An Ofgem spokesman said: “We know that with wider cost of living pressures, people are concerned about their bills so we will now use these responses to inform how we approach this complex issue. and set out the next steps in due course.”

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Consultants suggest businesses rethink how they use energy due to conflicts in the Red Sea, recommending ways to save money and deal with uncertainties.

Commercial energy and sustainability consultancy, Advantage Utilities, is advising businesses to reconsider their energy options in the wake of recent attacks impacting shipping routes in the Red Sea.

As freight companies divert around Africa to avoid the turmoil, Advantage Utilities suggests exploring energy optimisation technology to reduce consumption.

Additionally, businesses are encouraged to consider flexible procurement methods or longer-term energy contracts.

These approaches can help minimise exposure to fluctuations in wholesale energy prices and enhance sustainability through more efficient practices and equipment.

Advantage Utilities Chief Executive Officer Andrew Grover, cautioned that further price increases may still occur in the current energy market, stating: “Should the ongoing conflict escalate further, the negative bearing on world energy prices could be significant.

“Disruption lasting for two more weeks could increase prices further. This is at the forefront of our outlook as we head into 2024. Businesses should consider how they would react if further disruption does occur and exploring the benefit of securing longer term or flexible traded contracts should be considered as a means of mitigating further volatility in future.”

A new project aims to assist up to 90 local businesses in baseline emissions assessment, action plan development, and transitioning to net zero over the next 18 months.

The Mid South West (MSW) region has secured a £300,000 grant through Innovate UK’s Fast Followers programme, aimed at supporting local businesses on their journey towards achieving net zero emissions.

In the next 18 months, the “Driving Net Zero Transformation of the Mid South West Region” project will engage up to 90 businesses across the region.

The primary goal is to assist these businesses in assessing their current emissions, crafting actionable plans and working towards the ultimate target of achieving net zero status.

The MSW region, encompassing diverse sectors such as agri-food, manufacturing and engineering, is home to more than 27,000 businesses.

Many of these operate in energy intensive sectors, making support crucial as they embark on the path toward net zero emissions.

Speaking at the funding announcement Councillor Malachy Quinn, Chair of the Mid South West Region Governance Steering Group said: “We are delighted to have been awarded funding from Innovate UK, which will enable the MSW Partner Councils to further support and guide our local businesses as they transition to net zero.”

Image: Armagh City Banbridge & Craigavon Borough Council

In 2023, Ofgem collected £77.2 million in fines, customer refunds and compensation from energy companies.

In 2023, Ofgem executed enforcement actions that resulted in the recovery of £77.2 million from various energy suppliers.

This figure signifies a notable increase from the £27.3 million retrieved in the previous year.

The collected funds encompass fines, customer refunds, compensations and alternative action payments.

A specific portion, amounting to £5 million, was derived from fines imposed on companies found in breach of regulatory standards.

The infractions primarily revolved around unfair billing practices by certain electricity generators, instances of inadequate customer service marked by unacceptable call waiting times and a failure to automatically compensate customers for delays in final billing during the switching process.

Furthermore, Ofgem instructed energy suppliers to give £13 million directly to customers in 2023 to address issues with service quality.

Most of the recovered funds, over £57 million, went to Ofgem’s Energy Redress Fund.

This fund assists charities and community projects in providing energy-related support to vulnerable customers.

Image: Energy Management LLP