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Modest cuts in gas and electricity prices by the Big Six energy suppliers in early January for their tariff customers have been welcomed by stakeholders. But analysts have warned that this development is unlikely to usher in a new era of shrinking bills for businesses

Avoid roll-overs

According to research carried out by the Centre for Economics and Business Research, by the end of 2012 business gas and electricity prices could increase as much as 15%. As such the organisation has recommended that businesses actively manage their energy needs. It warned that those who do not could expect higher tariffs as automatic renewal of contracts often produce roll-over tariff rates that can be as much as 50% higher.

The research also noted that non-domestic energy users are at particular risk as there is a limited period before contracts expire during which businesses are able to switch suppliers. If they fail to take action within this fixed time period, then a new contract at a higher rate can be automatically triggered.

Buyer beware

The regulator is currently consulting on proposals it has set out to better safeguard business customers against unfair practices by the Big Six energy companies, but many believe these measures will not go far enough. Businesses are advised to take proactive steps to securing better energy deals.

Jonathan Elliott, Managing Director of energy broker Make It Cheaper said: "The best prices are only available to those who are proactive about shopping around during their renewal window and then manage to avoid being rolled-over by sending in a termination letter."

Smoke and mirrors

But on 17 January price comparison provider uSwitch claimed that, when implemented, the cuts by the Big Six would still leave households with a £1.9bn “hole in their pockets” following significant price rises last year. In 2010 there was a total of £2.24bn (21%) added onto household energy bills, but this year’s price cuts have taken off just £340mn (2.6%) of this. Despite a reduction in the average energy bill to around £1,259, according to uSwitch, consumers are still paying 91% more than the £660 current in January 2006. The price cuts “barely scratch the surface of fuel poverty in the UK, which now impacts an estimated 6.9mn households”, it added, removing 136,500 households from the condition.

Source : The Informer